Friday, November 8th 2019
Xerox Corporation Tries To Acquire HP Inc.
Xerox Holdings Corporation, a maker of print and digital document products and services, has reportedly made an offer to buy HP - a maker of wide variety of PCs and printers, for as much as 30 billion USD. The decision for HP takeover came after negotiations between HP Inc. and Xerox Corp. that had a topic of "our multi-year strategy and our ability to position the company for continued success in an evolving industry"
Comparing the two companies, HP Inc. has a much larger market capitalization of over 28 billion USD, while Xerox Corp. has a bit over 8 billion USD. However the underlying reasons for this takeover could be that HP possesses a debt valued at around 20 billion USD, which is quite a lot comparing to market cap. Even with good revenue numbers, HP will remove up to 16% of its workforce by 2022, due to the declining business of selling printers. Xerox plans to take over HP in hope to combine the workforce of two companies and lower their combined expenses by as much as 2 billion USD, that Xerox estimates.
HP released a PR statement where they say the following:
Sources:
Bloomberg, HP
Comparing the two companies, HP Inc. has a much larger market capitalization of over 28 billion USD, while Xerox Corp. has a bit over 8 billion USD. However the underlying reasons for this takeover could be that HP possesses a debt valued at around 20 billion USD, which is quite a lot comparing to market cap. Even with good revenue numbers, HP will remove up to 16% of its workforce by 2022, due to the declining business of selling printers. Xerox plans to take over HP in hope to combine the workforce of two companies and lower their combined expenses by as much as 2 billion USD, that Xerox estimates.
"As reviewed at HP's most recent Securities Analyst Meeting, we have great confidence in our multi-year strategy and our ability to position the company for continued success in an evolving industry, particularly given the multiple levers available to drive value creation. Against this backdrop, we have had conversations with Xerox Holdings Corporation (NYSE: XRX) from time to time about a potential business combination. We have considered, among other things, what would be required to merit a transaction. Most recently, we received a proposal transmitted yesterday. We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye towards what is in the best interest of all our shareholders."This basically confirms the intention of HP to be acquired by Xerox, in hope to combine their forces and deliver a better solution to the market with more value for existing and upcoming customers. Additionally, Citigroup Inc. will supposedly help Xerox with finances in order to merge with HP and take on HP's 20 billion USD debt.
18 Comments on Xerox Corporation Tries To Acquire HP Inc.
*Sammy printer division bought by HP not long ago
Don't touch it, you'll catch it!
Unless you diy via ebay.
Well there are the HP Inc for consumers (Pavilion, Omen, Deskjet, etc) and the HP Inc for Commercial use (EliteBook, Probook, Zbook, LaserJet, etc) and then there is the HPE that is a entire different company altogether that is only "Datacenter" stuff.
But more importantly: Xerox is not alone here - they're backed up by Fuji.Not any more. HP was making very good business laptops some time ago (Intel Core 2 era, for example).
Yes, EliteBooks have all the nice features and great specs. On paper they look very competitive vs the best from Dell or Lenovo.
But in reality they share many issues with the lower models - mostly concerning build quality.
That said, Xerox is like interested in the printing business here (expanding the business they know, not entering a new one).
PC division is a ballast they may decide to shed pretty soon after the deal.
The printers are solid though.
Desktops are also unkillable, old stuff like 8200s still running good with SSD's. All that has failed is few HDDs, couple of PSUs and... thats basically it.
HP grew 21% in both revenue and profits from 2016 -2018 while inventories gre 18%
Xerox shrunk by 9%, gross margins fell 7% and inventories on dropped by 2%
the CEO of xerox was fired by Meg Whitman from HP for not getting the EDS/HP merger going fast enough and HP wrote off 8B in value of EDS.
Naresh Shanker CTO of Xerox was former CIO of Palm that was acquired by HP, not another great acquisition. Naresh took over from Randy Mott who had transformed the HP IT org.
So Xerox is circling the drain and Icahn is trying to save his investment.