Only one winner

12 March 2020 By Richard Beales Follow @richardbeales1

The fallout from Covid-19 makes the printer maker’s hostile $35 bln bid for HP even edgier – and Xerox hasn’t raised all the cash yet. If it can do so, and if volatility continues, HP owners might bite. The problem for Xerox shareholders is that could mean too much risk for them.

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Xerox on March 10 filed a preliminary proxy statement for a special meeting of its shareholders to vote on the issuance of shares which forms part of Xerox’s $35 billion offer to buy rival printer maker HP. A date for the meeting has not yet been set.

A day earlier, Xerox filed a preliminary proxy statement in support of its director nominees for HP’s board. A date for HP’s annual shareholder meeting has not yet been set.

On March 2, Xerox launched a tender offer for HP, comprising $18.40 in cash and 0.149 Xerox shares for each HP share, worth $24 a share based on Xerox’s closing share price on Feb. 6. The tender offer expires on April 21, unless extended.

Xerox has secured $24 billion of bridge finance commitments. It said in its tender-offer filing that it may raise further cash through a private placement of equity or equity-linked securities in addition to having $2.7 billion of cash on hand.

HP on March 5 rejected Xerox’s unsolicited tender offer, saying it undervalues HP and would create an “irresponsible” capital structure.

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