Xerox has launched a bold bid to acquire HP

Xerox has launched a bold bid to acquire its much larger rival HP for more than $30 billion, including debt, in a move to revive the fortunes of two former tech innovators that have struggled for growth in recent years. The US printer and photocopier maker made a cash-and-stock offer late on Tuesday valuing HP, which makes printers and personal computers, at about $22 per share… Xerox’s unsolicited proposal represents approximately a 20 per cent premium on HP’s closing price on Tuesday. Citigroup has agreed to finance Xerox’s offer, which would have a meaningful cash portion, said two people with direct knowledge of the matter… Xerox’s market value is less than a third of HP’s but the combination could potentially unlock as much as $2 billion in annual cost savings… Xerox is trying to take advantage of the recent run-up in its share price, which is up 26 per cent over the past 12 months. HP by contrast has shed nearly 18 per cent of its value over the same period… Both companies operate at different ends of an industry that is in cyclical decline. Xerox makes large printers and copy machines for office use. Most of its $10 billion revenues last year came from renting and servicing them for businesses. HP, on the other hand, specialises in consumer printers. 

James Fontanella-Khan, Pan Kwan Yuk and Richard Waters