Xerox is threatening a hostile takeover bid of HP after the PC vendor rejected its previous acquisition offer.
Xerox says it wants a meeting with HP's board of directors by Nov. 25 or the printer maker will take its offer to HP's shareholders directly.
"The overwhelming support our offer will receive from HP shareholders should resolve any further doubts you have regarding the wisdom of swiftly moving forward to complete the transaction," Xerox wrote in a letter to HP's board on Thursday.
This past weekend, HP rejected Xerox's initial acquisition offer, which was valued at $22 per share or $33.5 billion in total. The potential deal is all about trying to merge the companies' printing businesses together. According to Xerox, consolidation would help both save $2 billion in costs over the next 24 months by combining their R&D and manufacturing teams while also streamlining their corporate functions.
"Our combined scale, product portfolio and global reach would allow us to compete effectively in the Production, Large Enterprise and SMB (small medium business) segments, while offering a truly differentiated Managed Services capability," Xerox said in its acquisition proposal to HP. "It is difficult to conceive of a strategic alternative for either company that delivers superior value."
However, HP isn't so sure. The company's board unanimously rejected Xerox's acquisition offer, saying it was too low, and that it remained confident in HP's strategy to generate long-term growth.
Nevertheless, HP's board didn't entirely kill off the merger idea either. "We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox," HP's board wrote in a letter Xerox this past Sunday.
One problem HP has with Xerox is the printer maker's revenue, which declined from $10.2 billion in June 2018 to $9.2 billion a year later. "In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination," wrote HP's board, which went on to call for continued talks with Xerox on a possible deal.
Today's letter from Xerox signals the printer maker isn't wiling to wait. "While we are glad to see that HP's Board of Directors acknowledges the substantial merits of a business combination between Xerox and HP and are open to exploring the value opportunity for our respective shareholders, your response lacks a clear path forward," Xerox added.
The letter goes on to accuse HP of trying to delay Xerox's merger proposal. It also claims the $33.5 billion offer was financially sufficient, amounting to a 29 percent premium on HP's average trading share price. "In light of favorable markets and terms, Xerox is determined to capture the compelling opportunity for our respective shareholders," the printer maker added.
HP did not immediately respond to a request for comment. But left unsaid from the merger talks is how any of this will exactly benefit consumers.