For the second time within a week, HP Inc. has pushed back against Xerox Holdings Corp.’s efforts to force a $33.5 billion acquisition.
The Norwalk-headquartered Xerox gave HP until 5:00 p.m. today to “agree on mutual confirmatory due diligence to support a friendly combination.” However, HP’s President and CEO Enrique Lores and Board Chairman Chip Bergh issued a response yesterday that openly questioned Xerox’s viability and tactics.
“In particular, there continues to be uncertainty regarding Xerox’s ability to raise the cash portion of the proposed consideration and concerns regarding the prudence of the resulting outsized debt burden on the value of the combined company’s stock even if the financing were obtained,” the pair wrote in an open letter to Xerox CEO and Vice Chairman John Visentin. “Consequently, your proposal does not constitute a basis for due diligence or negotiation.
“We believe it is important to emphasize that we are not dependent on a Xerox combination,” the HP leaders added. “We have great confidence in our strategy and the numerous opportunities available to HP to drive sustainable long-term value, including the deployment of our strong balance sheet for increased share repurchases of our significantly undervalued stock and for value-creating M&A.”
Lores and Bergh also faulted Visentin for using “aggressive words and actions” in trying to force a takeover featuring “opportunistic terms and without providing adequate information.” They also called the Xerox executive’s behavior into question.
“When we were in private discussions with you in August and September, we repeatedly raised our questions; you failed to address them and instead walked away, choosing to pursue a hostile approach rather than continue down a more productive path,” they said. “But these fundamental issues have not gone away, and your now-public urgency to accelerate toward a deal, still without addressing these questions, only heightens our concern about your business and prospects. Accordingly, we must have due diligence to determine whether a Xerox combination has any merit.”
Xerox has yet to publicly respond to HP’s rejection of its acquisition efforts.