Xerox CEO Pitching Deal to HP Shareholders

Xerox CEO Pitching Deal to HP Shareholders

(DECEMBER 9, 2019) - Xerox CEO John Visentin has begun meeting with some HP shareholders this week as he tries to convince them to force the company’s board into entering into merger talks.

At the same time, Xerox published an investor presentation, outlining its “powerful case” for the proposed acquisition of HP. According to Xerox, its cash/stock offer “conservatively” represents a pro forma implied value of $31 per share for HP, an 82% premium to HP’s share price of $17 as of November 5.

“The value of the transaction goes beyond economics,” said Visentin in the presentation. “In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way. The increased cash flow generated by this deal will allow for rapid deleveraging, greater capital returns to shareholders and enhanced investment in innovation that can put these storied brands at the forefront for decades to come.”

In addition to the $2 billion in synergies that Xerox believes can be achieved within two years, it says that the combined companies would be able to win $1-$1.5 billion in new business thanks to their complementary product offerings, scale and intellectual property strength.

The investor presentation also talked up the ability of the Xerox management team to lead a merged entity and increase shareholder value via a “proven playbook”.

Addressing HP’s shareholders in the presentation’s introduction, Visentin concluded: “We strongly encourage you to urge HP’s board of directors to pursue this transaction on a friendly basis, starting with the provision of mutual due diligence.”

Xerox is requesting a three-week due diligence period, something it believes is “not onerous”.

Meanwhile, HP CFO Steve Fieler took part in a Credit Suisse investor conference last week in which he said his company’s position was “very clear” and that the HP board was focused on creating value for all shareholders. - (OPI)