HP / Xerox Saga: Latest Developments – Thoughts From DataMaster

The following appears on DataMaster.FR / Printer-Benchmark.com

Xerox offered more money for HP

By Ed Bilson – Xerox’ board offered HP Inc shareholders $22 per share in 2019, and upped this to $24 per share on February 10. This $24 is made up of a similar proportion of cash and Xerox stock, but the increased offer still represents a substantial hike in the sums Xerox would have to borrow to fulfil the deal – and thus on the degree of debt the resulting company would have.

HP’s share price last week was around $22.64. Some analysts have suggested that an even better offer of $25 per share might tempt enough HP shareholders to accept the deal, with others suggesting that it might take $26 to tip the balance – which would value HP Inc at around the value it had in 2018.

Xerox continues to point at the advantages of a merger. HP Inc maintains even this increased proposal undervalues HP, and continues to point at the risks of saddling the resulting company with debt. HP Inc labelled Xerox’s proposal “a fundamentally flawed value exchange” that would result in “an irresponsible capital structure.”