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.
