Over the past few days, printing company Xerox and HP have been in a back-and-forth. Xerox first approached HP with the intent to buy the company for $22 per share, for a total value of over $30 billion. HP"s board of directors swiftly refused the proposal, citing, among other things, Xerox"s declining revenue in the past year.
Xerox wasn"t convinced by this, and issued a letter to HP, threatening to take the offer directly to shareholders if the company didn"t agree to mutual due diligence to complete the deal. To Xerox"s repeated dismay, HP"s board of directors again refused to sell the company, and now, the former company has issued yet another letter to HP.
The hostility from Xerox is evident right from the opening line, which states "Your refusal to engage in mutual due diligence with Xerox defies logic". The letter goes on to present a series of reasons why Xerox believes HP"s refusal to accept the offer doesn"t make sense, such as the fact that HP"s public disclosure says that past performance doesn"t necessarily indicate future performance of a business.
The letter also highlights that Xerox"s stock is up 96% year-to-date thanks to a business plan announced earlier this year, and that HP might not be able to deliver on its promise to achieve $2+ billion worth of synergies from its restructuring plan.
Finally, the letter confirms that Xerox is moving forward with its threat to bid directly to HP shareholders. CEO John Visentin goes as far as to say:
"While you may not appreciate our “aggressive” tactics, we will not apologize for them. The most efficient way to prove out the scope of this opportunity with certainty is through mutual due diligence, which you continue to refuse, and we are obligated to require."
It looks like HP might have a tough battle ahead, but it remains to be seen if Xerox"s takeover plans will go through. HP has yet to respond to this new letter.