Xerox Holdings Corp.’s attempt to woo HP Inc. into a $33.5 billion acquisition has been rejected by the Palo Alto, California-based company.
In a letter to Xerox Vice Chairman and CEO John Visentin, HP’s President and CEO Enrique Lores and board Chairman Chip Bergh gave the Norwalk company a “thanks but no thanks” response to its proposed $22 per share takeover, along with an unsubtle jab at Xerox’s financial health and readiness to take on such a transaction.
“We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox,” wrote Lores and Bergh. “However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox.
“We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018,” the letter stated, “which raises significant questions for us regarding the trajectory of your business and future prospects.
“In addition,” the letter continued, “we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination. With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”
Xerox’s bid for HP came after resolving a legal dispute with Japan’s Fujifilm Holdings Corp. related to their aborted 2018 merger. Under the terms of the agreement between the companies, Fujifilm dropped its $1 billion lawsuit against Xerox while Xerox agreed to sell its 25% stake in Fuji Xerox Co. Ltd. and its 51% stake in Xerox International Partners (XIP) – an original equipment manufacturer joint venture between Xerox and Fujifilm Xerox – along with the grant of a new IP license.