Xerox ups HP bid and boasts of shareholder support

Xerox ups bid for reluctant competitor by over nine per cent

Xerox has upped its bid to take over rival HP by over nine per cent as it claims that its print rival's shareholders are backing a potential merger.

Xerox announced on Monday that, in early March, it will launch a tender offer for all of the outstanding shares of common stock in HP at a price of $24.00 per share.

The offer comprises $18.40 in cash and 0.149 Xerox shares for each HP share.

HP's share price jumped by 4.46 per cent to $22.70 in overnight trading following Xerox's announcement.

The revised offer is higher than the $22 per share bid made by Xerox last November and, according to the Financial Times, marks an increase in value from $33.5bn to around $35bn including debt.

The new price is a 40 per cent premium on HP's 30-day volume weighted average trading price of $17.00, Xerox claims.

The print vendor also said that HP shareholders are backing a merger with Xerox, claiming that the raised price will enable them to accept the offer despite "HP's consistent refusal to pursue the opportunity".

"Xerox has met, in some cases multiple times, with many of HP's largest stockholders. These stockholders consistently state that they want the enhanced returns, improved growth prospects and best-in-class human capital that will result from a combination of Xerox and HP," Xerox said.

It went on to argue that a merger with Xerox is the best possible outcome for HP, which recently announced up to 9,000 job cuts globally as its print supplies business continued to come under pressure.

"The value created by the synergies realised in a combination of Xerox and HP is incremental to any value that HP can create by revising its strategic plan or dramatically changing its capital allocation policy to incorporate additional share repurchases. Xerox's offer provides HP stockholders with both significant, immediate cash value, and meaningful upside via equity ownership in the combined company."

HP's board of directors unanimously rejected Xerox's initial offer claiming that it significantly undervalued the company.

At the start of the year, Xerox secured $24bn in funding to fuel another takeover attempt and relay any doubts that it lacked the capital to proceed with a merger.