Xerox reportedly mulls takeover bid for HP

Xerox reportedly mulls takeover bid for HP

Xerox world’s most popular photocopiers brand is considering making a cash and stock offer buying personal computer maker Hewlett Packard Inc at a premium to its market value of about $27billion. HP Inc is the world’s second-largest personal computer maker after the Chinese brand, Lenovo. Lately, it has struggled with its printer business segment as revenues from it are declining year on year basis. In October, HP’s new CEO, Enrique Lores, was planning to cut 16 percent of its workforce by 2022 as a part of restructuring business. If the deal is finalized, it would be favorable to the Xerox business of copying & printing, which has been adversely hit by global advance towards cloud computing & competition from Dell technologies. It will be interesting to see how Xerox will finance the acquisition of a company, which is three times higher than its market value.

Earlier this week, Xerox had said it would sell its 25% stake in Fujifilm’s holding, which will fetch $2.5 billion to the company. This is a big positive for the company in the cash front. Fujifilm’s also announced on Tuesday that it had dismissed a lawsuit against Xerox. World street journal has reported that Norwalk, Connecticut based Xerox Holdings Corp has received an informal funding commitment from a major bank. On Wednesday, HP confirmed it had received a bid from Xerox.

Last year Xerox had scrapped its $6 billion deal merger with Fujifilm, and its annual revenue is $10 billion. This deal could be one of the most surprising takeover deals of the decade. The combined entity would have a dynamic product mix of printing technologies that would revive their business Fortunes. Xerox expects that potential business combination would save $2 billion yearly. HP shares jumped 6.4 percent on Wednesday after the report came into the market. Xerox and HP already have a business relationship in the laser printing sector. Earlier this year, both companies have committed to launch the device as a service program (DaaS) financial models for customers. Both companies are already into 3D printing. Xerox shares have given 84 percent returns in 2019 so far and are fourth best-performing stock in S&P 500.

Daniel Brian

I've spent eight years as a writer and an associate editor for the best in the business, including as a Brazil-based staffer for The Wall Street Journal. I'm particularly interested in companies finding unique ways to make our world more sustainable. Since 2017, I focus on business and investing in the big emerging markets exclusively for NeptunePine. My work has appeared in The Boston Globe, The Nation, Salon, and USA Today.