Xerox Corp. has offered HP a four-week window for the respective organizations to examine their respective organization’s books as an enticement for the Palto Alto, California-based technology giant to accept its takeover bid, according to a Bloomberg report.
Citing people familiar with the overture, Bloomberg said the due diligence offer enables HP to consider the cost savings that would be realized through the combining of the companies.
The purchase offer by Xerox calls for $22 a share in cash and stock. As of Thursday morning, HP was trading at just under $20 on the New York Stock Exchange, making the offer a 10%-plus premium, though it was 20% at the time of the offer because HP’s stock has risen in light of the report.
Last week HP publicly acknowledged receiving the offer from Xerox. The companies have discussed combination scenarios in the past, including this year, with HP potentially acquiring Xerox.
HP’s response to this recent overture indicated it would not rule out taking action “if there is a better path forward and will continue to act with deliberation, discipline and an eye towards what is in the best interest of all our shareholders.”
Also last week, Norwalk, Connecticut-based Xerox cleared its plate in the FUJIFILM saga, agreeing to sell both its 25% stake in Fuji Xerox and its 51% share in Xerox International Partners to a FUJIFILM affiliate for $2.3 billion after taxes. Those deals have closed.
As for the HP scenario, Bloomberg reported that one of the sticking points to a possible transaction is a disagreement about which party should be the buyer and which one the seller. Along those lines is the question of which management team would run the pro forma company.
There is no question as to which company is bigger: HP has a market value of approximately $27.3 billion while Xerox’s is approximately $8 billion. Xerox reportedly has a financing commitment from Citigroup.
