Many giant investors expressed their interest to fund for Xerox Holdings Corp. (Xerox) if the company persists to take over the US information technology company, HP. Bank of America (BOA) is one of three major investors that have shown interest in funding a possible Xerox’s acquisition of the tech company. However, the tech company had already denied the acquisition deal for $33.5 billion offered by Xerox in November 2019.
Rejection of Earlier Xerox’s Attempt
Earlier in November 2019, HP, the producer of computer hardware and printers, had rejected Xerox’s offer nearly unsolicited $33.5 billion for finalizing the acquisition deal. The California-based tech company, HP explained the reason why the company denied Xerox’s proposal, “the cash and stock deal undervalues its business and its board cited concerns about “outsized” debt levels should the companies combine.”
HP’s management replied to, in a letter to Xerox’ CEO, John Visentin, “Our Board of Directors has reviewed and considered your unsolicited proposal dated November 5, 2019, at a meeting with our financial and legal advisors and has unanimously concluded that it significantly undervalues HP and is not in the best interests of HP shareholders.” HP management continued, “In reaching this determination, the Board also considered the highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock.”
HP’s Opening for Other Options beside Acquisition
Referring to the decline demands of both companies, HP expressed its view on the advantages and potential benefits behind the consolidation. The tech company asserted its view that the company would be looking for other options to be working with Xerox Holdings. As explained in the letter, “We remain ready to engage with you to better understand your business and any value to be created from a combination.”
Xerox offered earlier, “it will pay $17 per share of HP in cash and a fractional share of Xerox stock for each share they held in HP.” Had the deal been finalized, HP would own around 48% of the combined company’s share. HP rejected the offer and said, “It has “great confidence” in its ability to deliver long-term value.” The board also revealed, “it had “significant questions” about the trajectory of Xerox’s business and prospects, particularly given a recent decline in its revenue.”
Three Main Investors for Xerox
Besides Bank of America, other financial investors included Citigroup, the US investment banking company and Mizuho Financial Group, a Japanese banking holding company. As reported by the Wall Street Journal (WSJ) Monday, Xerox, which is the world’s second-largest PC manufacturer behind Lenovo, “has secured financing for its takeover offer for HP Inc.” Among these three main investors, the BOA is likely to fund the majority of the transaction of the proposed acquisition. As the WSJ reported, “The Charlotte-based financial institution is one of three firms agreeing to fund a deal with up to $24 billion.”
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