Xerox Secures $24 Billion In Binding Financing Commitments For Hostile HP Take-Over
Image Courtesy of Xerox
Xerox is forging ahead with its $33 billion takeover bid of larger rival HP, securing $24 billion in financing from big banks.
Famed activist investor Carl Icahn, who holds just over a 10% stake in Xerox and almost a 5% stake in HP, has reportedly been one of the deal’s biggest advocates.
Xerox and HP have both struggled in recent years, spinning off different ventures to leave behind an aging printing business that remains profitable for now—though earnings are dwindling every year.
One big question that remains is what Xerox plans to do with HP’s PC business, which accounts for around two thirds of its overall revenue.
In that regard, Xerox would be buying into two markets that are slowing: printing and PCs.
Speculation is mounting as to whether or not Xerox really want to do that.
However Xerox continues to present its case for a buyout directly to HP shareholders after months of back-and-forth and increasingly tense relations between the two companies.
Xerox said on Monday that it has secured financing for its $33 billion hostile takeover bid of HP despite the rival printing company’s efforts to block the deal.
In a public letter to HP’s board from Xerox CEO John Visentin, the company confirmed that it had obtained $24 billion in financing from major financial institutions—Citi, Mizuho and Bank of America.
While there was initially doubt over whether Xerox would be able to raise the cash necessary to complete such a deal, these latest funding commitments are a vote of confidence from big banks, which, according to commentators, shows that the printing company is serious about its “value-creating combination with HP.”
Citi, Mizuho And Bank Of America Back Xerox In Its Pursuit Of HP.
As a result, Xerox Holdings Corporation today sent a letter to the Board of Directors of HP Inc.confirming that it has obtained $24 billion in binding financing commitments from Citi, Mizuho and Bank of America to complete its value-creating combination with HP.
The full text of the letter is as follows:
Dear Chip and Enrique,
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. It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cash flow that could, in turn, enable increased investments in innovation and greater returns to shareholders.
But it also became clear from our dialogue with your shareholders that you and your advisors have been questioning our ability to raise the capital necessary to finance our proposal. We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho and Bank of America.
My offer stands to meet with you in person, with or without your advisors, to begin negotiating this transaction.
Sincerely,
John Visentin
Vice Chairman and CEO
Xerox Holdings Corporation
