If you thought that the Xerox – HP soap opera was done and dusted just because HP said so, you’d be sorely mistaken. Not only is Xerox not taking “no” for an answer, but it’s threatening to turn the “friendly” acquisition discussion – hostile.
According to a Reuters report, HP has until Monday, November 25, to open its books, otherwise Xerox will be taking the discussion straight to HP’s shareholders.
Earlier this month, HP rejected Xerox’s offer of $22 per share, saying it undervalued the company. According to 15 different analysts, the median price target for HP stock is $20, Reuters says.
All of this is “confusing” for Xerox.
“We are confused by this reasoning in that your own financial adviser, Goldman Sachs & Co, set a $14 price target with a ‘sell’ rating for HP’s stock after you announced your restructuring plan,” Xerox wrote in its letter to HP. “Unless you and we agree on mutual confirmatory due diligence to support a friendly combination by Nov. 25, Xerox will take its compelling case to create superior value for our respective shareholders directly to your shareholders,” the company added.
HP said that Xerox’s plan would mean “outsized debt” for the new company, and offered to go vice-versa, and buy the printer company instead. To do that, it needs to do its due diligence on Xerox, first.
Xerox accepted the request, but claims HP refused to open its books.
“Any friendly process for a combination of this type requires mutual diligence - your proposal for one-way diligence is an unnecessary delay tactic,” Xerox wrote.
Xerox had initially offered to buy out HP on November 5, in a move which many saw as surprising, given that HP is more than five times larger than Xerox.