Xerox Holdings (NYSE:XRX) has said that it is holding on the $33 billion acquisition offer for HP Inc. (NYSE:HPQ). The company has warned that it could directly take the matter to shareholders on Monday.
Xerox threatens to take acquisition offer to HP stockholders
The announcement from Xerox comes days after the printer and computer maker rejected a bid that it said undervalues it. In a letter to the HP Chairman Charles Bergh and CEO Enrique Lores, Xerox stated that it was surprised about the rejection of the stock plus cash offer that sets the value of HP at $22 per share.
Xerox CEO John Visentin stated that there was no reason for delaying the process of having a friendly combination of the two companies. Visentin affirmed that Xerox was ready for a proxy battle for it to procure a deal. He added that Xerox would present its case to create value for its shareholders directly to HP shareholders. In the letter, Visentin indicates that their offer will receive sufficient support from HP stockholders, which will dispel any concerns regarding the transaction.
HP wants more engagement with Xerox management
Although HP rejected the offer, it nonetheless left the door open for more negotiations. The company indicated that it required more engagements with the Xerox management as well as access to vital information on Xerox. It is through this that HP can evaluate the merits of a possible transaction.
Goldman Sachs & Co. then financial advisor of HP had set a price target of $14 with a sell rating for the company’s stock when it announced its restructuring plan on October 3. Xerox’s offer represents a 29% premium to HP’s recent trading price. Visentin stated that their offer was not uncertain or highly conditional as HP alluded.
According to CFRA analyst, Angelo Zino, who covers HP indicated that activist investor Carl Icahn was the one pushing for the deal to happen. Before the rejection of the deal, Icahn had indicated that he had acquired a 4.24% stake in HP and that a merger between the company and Xerox could be possible.