Office romance

18 November 2019 By John Foley Follow @johnsfoley

If merging the printer and copier makers creates the savings Xerox has outlined, a $35 bln tie-up really is a no-brainer – but only if both can compromise. For shareholders, HP should be buying Xerox, not the other way around. But Xerox’s boss would be the best choice to lead it.

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HP’s board unanimously rejected a merger offer from Xerox on Nov. 17, saying it significantly undervalued the computer-and-printer maker.

HP added that the proposed deal was highly conditional and would leave the merged company with outsized debt levels.

Xerox is offering $22 per HP share, consisting of $17 in cash plus stock that would give HP approximately 48% of the merged company. Xerox said the transaction would be worth around $33.5 billion.

It said a combination would create $2 billion of cost savings within two years, and that it believes a deal could be signed in four weeks.

Carl Icahn owns 4% of HP and 11% of Xerox, according to Refinitiv data. The activist investor told the Wall Street Journal on Nov. 13 that a combination of the two companies was “a no-brainer.”

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