Xerox appears to be ramping up its bid to buy HP after it increased its acquisition offer by roughly $1.5bn. HP has turned down all previous Xerox offers (opens in new tab), saying they undervalued the company.
It would seem as Xerox can’t take no for an answer, so this Monday it raised its acquisition offer by $2, hitting $24 per share. However, the entire sum wouldn’t be paid out in cash – only $18.40. The rest would be in shares – 0.149 Xerox share pe HP share.
That would place HP’s value at around $35 billion, $1.5bn more than the previous offer of around $33.5bn. The market reacted positively to the news. HP's shares jumped three per cent, and Xerox's one per cent.
“This bid increase puts more pressure on Xerox to extract costs as a combined entity. I’d look for HP to question the economics of the synergies after Xerox raising their bid,” Morningstar analyst Mark Cash told Reuters.
For Cash, despite the need for consolidation in the market, the entire offer would require rethinking.
“While we believe the printing market is ripe for consolidation, we question why Xerox would want to acquire one of the largest players in a slowing computer market,” Cash said.
Xerox first suggested the acquisition of HP (opens in new tab) in early November last year, and was turned down almost immediately. HP CEO Enrique Lores, and Board Chair Chip Bergh, told Xerox’s representatives they were worried that the contract’s details as they stood, could potentially harm the company in the future.
They did say that they recognised the potential benefits of the consolidation, hinting that the two companies should continue the negotiations.
- Carl Icahn buys stake in HP, calls for Xerox deal (opens in new tab)