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.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital 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.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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– Naresh Khanna

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