In the latest twist in the Xerox/HP takeover tale – the former has secured funding from serious sources to get the show rolling.
The US firm has revealed it has secured binding financing commitments from Citi, Mizuho and Bank of America in order to buy HP or, as the company puts it, “creates value" by combining with its rival.
In total, the company secured $24bn. If it ever comes through, the entire deal should be worth approximately $33bn. HP turned down previous Xerox’s offers, saying it undervalued the company, as well as that it doubted Xerox’s funding solutions.
“Over the last several weeks, we have engaged in constructive dialogue with many of your largest shareholders regarding the strategic benefits of our proposal to acquire HP,” Xerox CEO John Visentin told HP’s board in a letter.
“It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cashflow that could, in turn, enable increased investments in innovation and greater returns to shareholders.”
After HP turned down the initial offer, Xerox said it would even consider hostile takeover.
While Xerox believes the merger would create new investment opportunities for the new business, as well as better positioning on the market, HP thinks Xerox’s plan would mean “outsized debt” for the new company.
“My offer stands to meet with you in person, with or without your advisers, to begin negotiating this transaction,” Visentin concluded.