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Xerox has eyes on HP takeover: WSJ
Posted on Wednesday, 06 November 2019 11:51
Coping machine maker Xerox Holdings is mulling over a possible acquisition of HP at a premium to the US-based computer and printer manufacturer’s current market capitalisation, people close to the matter told the Wall Street Journal (WSJ).
These sources observed that the potential buyer is considering tabling a cash and stock bid for the business, which is more than three times its size.
While the insiders did caution there is no guarantee of a deal being reached, a tie-up would bring together two household names that have been trying to reboot their operations, as the need for printed materials declines, with most organisations and individuals shifting to become paper-free and keep their data online.
Shares in HP have increased 14.1 per cent to USD 21.00 in pre-market trading at 04:00 today, with the company’s close yesterday giving the group a market capitalisation of USD 27.27 billion.
Xerox’s stock closed at USD 36.37 on 5th November 2019, valuing the total number of outstanding scrips at USD 8.05 billion.
Despite being worth significantly less than the company it plans to acquire, the potential buyer is expecting a windfall worth USD 2.30 billion after reaching a deal earlier this week to sell stakes in joint ventures with Fujifilm Holding to its partner, which includes its interest in Fuji Xerox.
Xerox’s board discussed the possibility of a takeover of HP in a meeting yesterday, the people told the WSJ, which also said the company has received informal funding commitment from a major bank.
HP is what remains of Hewlett-Packard following the 2015 spin off of the servers, data storage and related services arm Hewlett Packard Enterprise.
The company is billed as one of the world’s largest manufacturers of computers and laptops, while also supplying printers and ink cartilages.
WSJ’s report follows HP’s announcement yesterday that it plans to publish its full year financial results for the 12 months to 31st October 2019 on 26th November 2019.
In the nine months to 31st July 2019, the group recorded revenue of USD 43.35 billion, up slightly from USD 43.11 billion in the corresponding period of 2018.
Net earnings totalled USD 2.76 billion in the same timeframe, a 28.9 per cent decrease from USD 3.88 billion in Q1-3 2018.
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