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Xerox Holding Corporation (NYSE:XRX) 's decision to acquire HP Inc (NYSE:HPQ)'s printer business made headlines last year due to a multitude of reasons. The first of these was the fact that Xerox is a much smaller company than HP, and therefore, the printer manufacturer would need external funding if it were to close the deal. Then, things heated up when activist investor Mr. Carl Icahn confirmed his stake in both companies and claimed that the deal was in the best interest of HP's shareholders; a sentiment also echoed by Xerox's Chief Executive Officer Mr. John Visentin.
Following the public sparring between the two companies' managements, the last we publicly heard about the deal was on the 9th of December when Xerox officially took its takeover offer directly to HP's shareholders, after the printer and ink-cartridge seller's management refused to acquiesce to its demands. Now, in a new letter sent to HP Inc's board of directors, Xerox's C.E.O. John Visentin has confirmed that his company has secured $24 billion in binding commitments for the HP deal. Take a look below for more details.
Xerox Confirms $24 Billion In Binding Commitments For HP Acquisition Offer From Citi Group, Mizuho Bank & Bank of America
Xerox (NYSE:XRX) has been very direct in engaging HP's board of directors and management related to the former's takeover proposal. The company's chief has used strong language in his letters to HP and has been bold in stating that HP's board fails to see the value of the deal.
Following HP's rejection of Xerox's offer, Xerox's top executive had stated that he was "surprised" by the decision based on the fact that Xerox's offer price of $22/share did not adequately value HP Inc (NYSE:HPQ). The executive went as far as to state that the rejection showed that HP's management was not sincere towards looking after shareholder interests and that HP's decision to not provide Xerox with due-diligence was intended to delay the offer.
Now, after announcing its decision to take the offer directly to HP's shareholders, Mr. Visentin has shared more details regarding the activities in his new letter. As per the executive, Xerox (NYSE:XRX) has "engaged in constructive dialogue" with several of HP's largest shareholders. These discussions have been based on the agreement between all that a deal would improve the cash flow for the new entity, and as a result, generate significant returns and value for shareholders.
Mr. Visentin then counters HP (NYSE:HPQ)'s management's concern that Xerox will unable to raise capital for the deal by stating that he can now confirm that the trio of Citi Group, Mizuho Bank and Bank of America have provided his firm with binding commitments worth $24 billion to fund the deal. These commitments are not subject to any due diligence.
Today's letter marks an important step forward in a deal that has been lingering for more than two months. The fact that Xerox has secured binding commitments will ease any potential concerns that HP's shareholders might have had for the deal, and it might end up putting HP's management in a very precarious condition where it could face opposition from shareholders over its current stance. Both companies have struggled in the digital era and a takeover will combine their strengths and eliminate weaknesses, argues Xerox.
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