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Xerox makes takeover bid for HP

By Kenny Yeo - on 7 Nov 2019, 10:39am

Xerox makes takeover bid for HP

(Image source: Wikipedia)

HP has confirmed that Xerox has made a takeover bid for the company.

Reports say that it's a cash and stock offer and that the combined offer could be more than US$27 billion.

HP said:

...we have had conversations with Xerox Holdings Corporation from time to time about a potential business combination. We have considered, among other things, what would be required to merit a transaction. Most recently, we received a proposal transmitted yesterday.

We have a record of 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.

The deal would make sense for both companies as their coming together could save more than US$2 billion in expenses.

The two companies face strong headwinds as sales of printers and copiers are expected to fall in the years ahead.

Just last month, HP said that it will cut between 7,000 and 9,000 jobs by the end of fiscal 2022 as it seeks to restructure itself and reduce operating costs.

What's peculiar about this deal, however, is that Xerox is a far smaller company than HP.

Xerox has a market cap of around US$8 billion whereas HP's is far larger at around US$29 billion.

However, reports say that Xerox has received an "informal funding commitment" from a major bank, which, at this point, is rumoured to be Citigroup.

Both companies stock are up at the time of writing. HP by around 6.36% and Xerox by around 3.58%.

Source: Bloomberg, CNBC, and Techcrunch