Xerox Holdings plans takeover bid for HP

HP is more than three times the size of Xerox

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Xerox Holdings Corp. is looking to takeover personal-computer and printer maker HP Inc., according to a report in the Wall Street Journal published on 5 November 2019. Xerox is considering making a cash-and-stock offer for HP, which has a market value of about US$ 27 billion, people familiar with the matter told the newspaper.

HP is more than three times the size of Xerox, and any bid would be at a premium to its current stock price, sources close to the development told the Wall Street Journal. Xerox, on 5 November, announced a deal to sell a 25% stake in Fuji Xerox Co., Ltd. to a subsidiary of Fujifilm. Total after-tax proceeds to Xerox from the transactions will include accrued but unpaid dividends through the date of the closings and are expected to be approximately US$ 2.3 billion. Xerox expects to use the proceeds opportunistically to pursue accretive mergers and acquisitions in core and adjacent industries. At the same time, it reportedly plans to return capital to shareholders and pay down its US$ 550 million December 2019 maturity debt.

According to the Wall Street Journal, Xerox has also received an informal funding commitment from a major bank, known as a ‘highly confident letter.’ Both companies are in cost-cutting mode, and a union could afford new opportunities to shed expenses—to the tune of more than US$ 2 billion, according to industry sources.

In the statement made on 5 November, Xerox also announced the dismissal of a US$ 1 billion-plus lawsuit filed against Xerox by the Japanese company. As our readers will recall, Fujifilm sued Xerox in June 2018 for breach of contract and estimated damages of more than US$ 1 billion. Fujifilm’s lawsuit alleged Xerox unlawfully terminated the merger due to pressure from major shareholders, who argued the deal undervalued Xerox.

Xerox’s agreement with Fujifilm to sell its joint-venture stakes and end the lawsuit allows Fujifilm to continue to be a significant supplier to Xerox, the Wall Street Journal reported.

In terms of share prices, HP and Xerox have diverged recently. Xerox shares are up 84% so far this year after the company launched a cost-cutting program. The company reported better-than-expected third-quarter earnings last week. It raised its 2019 outlook, again as reported by the Wall Street Journal. The stock rose by about 5% on 5 November on news of the agreement with Fujifilm. Xerox CEO John Visentin said on its earnings call that the company’s improved cash flow makes it well-positioned to pursue deals big and small.

HP shares, meanwhile, are down 10% so far this year. The company is expected to report its fiscal fourth-quarter earnings on 26 November.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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