Xerox Secures $24 Billion For Hostile Takeover Bid Of HP
Topline: Xerox is forging ahead with its $33 billion takeover bid of larger rival HP, securing $24 billion in financing from big banks. It continues to present its case for a buyout directly to HP shareholders after months of back-and-forth and increasingly tense relations between the two companies.
Xerox said on Monday that it has secured financing for its $33 billion hostile takeover bid of HP despite the rival printing company’s efforts to block the deal, the Wall Street Journal first reported.
In a public letter to HP’s board from Xerox CEO John Visentin, the company confirmed that it had obtained $24 billion in financing from major financial institutions—Citi, Mizuho and Bank of America.
While there was initially doubt over whether Xerox would be able to raise the cash necessary to complete such a deal, these latest funding commitments are a vote of confidence from big banks, according to the Wall Street Journal, which shows that the printing company is serious about its “value-creating combination with HP.”
“One of the big reasons HP said they wouldn’t accept a deal was concerns around Xerox’s financing—and now Xerox is publicly showing that they’ve resolved one of the big roadblocks in place,” says Morningstar analyst Mark Cash. “This financing may cause shareholders who were previously against a deal to maybe think twice about Xerox’s proposal.”
The two companies have been at odds since November when Xerox made several unsolicited bids that were unanimously rejected by HP’s board of directors. The rejection led Xerox to take its offer directly to HP shareholders in a bid to force the deal.
Xerox has argued for the merger, calling it a “compelling opportunity” which would save both companies $2 billion in costs over the next two years and result in revenue growth of up to $1.5 billion over the next three years. But HP’s board has its own concerns about a deal, questioning Xerox’s nearly 10% revenue decline since last year and speculating that a combined company would have too much debt.