Printer and copier company Xerox said Tuesday it will proceed with a hostile bid for HP after being rebuffed in efforts to negotiate a takeover.
“We plan to engage directly with HP shareholders to solicit their support in urging the HP board to do the right thing and pursue this compelling opportunity,” Xerox CEO John Visentin wrote in a letter to HP’s board.
The two fading tech giants have been quietly discussing a combination since last summer. The talks broke into the open earlier this month when Xerox offered $33.5 billion, $22 a share, for HP.
HP said it was open to continued talks but dubious Xerox could pull off the deal without taking on enormous debt that might sink the businesses. Investors were skeptical, too, that a single company would be better able to cope with the challenges the two businesses have been facing separately.
Xerox’s headquarters are in Connecticut and HP’s base is in Silicon Valley. But each has substantial operations in the Silicon Forest, with Xerox’s color printing group operating on the old Tektronix campus in Wilsonville, Ore., and HP running research sites in Vancouver and Corvallis, Ore.
HP emerged four years ago from the company formerly known as Hewlett-Packard Co. HP inherited the old company’s printer and computer businesses — both of which have suffered as demand for printer services and PCs declined.
Xerox has been weathering similar troubles amid diminished interest in printed documents during the digital age. But it argues the two companies could save billions of dollars by combining and cutting redundant costs — some of which could be invested in new technologies.
Over the weekend HP rejected Xerox’s demand that the two companies begin a formal process of reviewing each other’s financial records as a step toward bringing the businesses together. HP said Xerox’s offer wasn’t high enough and said it doubted Xerox’s own “viability.”
Responding Tuesday, Xerox said it will follow through with its threat to make a hostile bid directly to HP shareholders.
“While you may not appreciate our ‘aggressive’ tactics, we will not apologize for them,” Visentin wrote.
Investors remain dubious. HP shares fell 1.7% at Tuesday’s open to $19.80, below Xerox’s $22 offer price. Xerox shares fell 0.7% to $38.51.
Billionaire investor Carl Icahn owns stock in both companies and has said he supports efforts to bringing them together. It’s unclear, though, how much of his own capital he intends to deploy to make that happen.
