Xerox Holdings Corporation has made its first big move in its hostile takeover bid of HP by releasing a tender to acquire all of the latter’s outstanding shares for US$24 per share.
The offer is made up of US$18.40 in cash and 0.149 Xerox shares for each HP share and expires on April 21.
As part of this process, Xerox also restated its commitment letter to add MUFG, PNC, Credit Agricole, Truist and Sun Trust Robinson Humphrey as commitment parties to provide a portion of the financing along with Citi, Mizuho and Bank of America under its previously confirmed $24 billion in binding financing commitments (that are not subject to any due diligence condition).
Xerox vice chairman and chief executive officer John Visentin said the offer provides both immediate cash and long-term value to HP shareholders.
“Our proposal offers progress over entrenchment,” Visentin said.
“HP shareholders will receive $27 billion in immediate, upfront cash while retaining significant, long-term upside through equity ownership in a combined company with greater free cash flow to invest in growth and return to shareholders.”
Visentin has also urged HP shareholders to “secure superior value” by tendering into Xerox’s offer and electing its director candidates.
The move comes after HP reached out to Xerox to explore if combining the businesses would create value for HP shareholders and add to its strategic and financial plan days after it adopted a $US15 billion shareholder rights plan which Xerox labelled a “poison pill”.
When HP outlined the shareholder rights plan, it also indicated it is open to exploring a possible combination of the two businesses since Xerox first made its $US33b unsolicited offer for HP on 5 November 2019.
This proposal was knocked back by HP with HP chairman Chip Bergh saying it “significantly undervalues HP and is not in the best interests of HP shareholders”.
Visentin then offered HP shareholders US$17 per share in cash and 48 per cent of the pro forma of the combined company, which he said he believes is worth US$14 per share.
HP rejected Xerox’s takeover bid yet again, following which Xerox responded with a potential tender offer for all of the outstanding shares of common stock of HP at US$24.00 per share, which it has now proceeded with.
The tender offer and withdrawal rights will expire at 5pm New York City Time on April 21 unless the offer is extended.
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