After receiving back-to-back rejections for its proposed $33.5 billion acquisition offer, Xerox Holdings Corp. has informed HP Inc. that it will push ahead with its takeover plans by going directly to HP’s shareholders.
In a letter to HP President and CEO Enrique Lores and Board Chairman Chip Bergh, Xerox CEO and Vice Chairman John Visentin insisted that their “refusal to engage in mutual due diligence with Xerox defies logic,” adding that the “potential benefits of a combination between HP and Xerox are self-evident. Together, we could create an industry leader — with enhanced scale and best-in-class offerings across a complete product portfolio — that will be positioned to invest more in innovation and generate greater returns for shareholders.”
Visentin pointed to stock market reaction to Xerox’s actions, noting HP and Xerox shares rose by 9.5% and 6.6%, respectively, since the Norwalk-headquartered company announced is acquisition proposal. Visentin also claimed to have “already received inquiries from several HP shareholders” that expressed encouragement over the concept of the transaction.
“We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity,” Visentin stated, without giving specifics on how he planned to pursue this strategy.
One of the prominent shareholders in HP is activist investor Carl Icahn, who was partly responsible for the cancellation of Xerox’s planned 2018 merger with Japan’s Fujifilm Holdings and the ascension of Visentin as Xerox’s chief executive. According to the Wall Street Journal, Icahn owns a 4.24% stake in HP as well as a 10.6% stake in Xerox.
Icahn has been a vocal advocate of Xerox’s eyeballing of HP, claiming the “combination is a no-brainer – I believe very strongly in the synergies.”