back to article Xerox: Prepare to say cyan-ara, HP Inc. We're no paper tiger. We're really very serious about that hostile takeover

Xerox has vowed, again, to launch a hostile takeover of HP Inc by sidestepping the board and going directly to shareholders. The will-they-won’t-they-saga started in the first week of this month when Xerox confirmed it wanted to wed HP at the altar of acquisitions for $33.5bn, a move that received the seal of approval from …

  1. Ian Michael Gumby Silver badge

    Smaller company attempting a hostile takeover?

    Xerox is not in a really good position unless Icahn wants to really spend more money on HP shares.

    I seriously doubt anyone outside of Icahn wants this.

    1. Imhotep

      Re: Smaller company attempting a hostile takeover?

      The people at HP may not want it. But stockholders may - if the offer is high enough, they could see it as a way to exit a struggling company with a nice chunk of cash in hand. I imagine they'll want a better offer: more cash and less or no stock.

      1. Doctor Syntax Silver badge

        Re: Smaller company attempting a hostile takeover?

        If I were an HP stock holder I'd be thinking that most of the money I'd get would be borrowed. If I also got stock I'd be holding a chunk of that debt. In other words I'd effectively have borrowed the money to pay myself and have to pay interest on it. No way would I want stock.

        OTOH if I were a Xerox stock holder I'd be thinking if it were an all cash deal I'd be borrowing heavily to buy a chunk of HP shares - but if I wanted to do that I'd just go out and buy them myself. But Xerox has money from the Fujifilm deal; instead of borrowing more money to no good purpose why don't they just hand me my share of the cash in hand?

        1. Mark 85 Silver badge

          Re: Smaller company attempting a hostile takeover?

          If the stock price is up that much (per the article) on both companies then there's some investors looking ahead and realizing this is the time to get out and still make a profit.

    2. password1234567890

      Re: Smaller company attempting a hostile takeover?

      I just want HP to die a painful death after what the corporate raiders have done to that once great company.

    3. paulf Silver badge
      Meh

      Re: Smaller company attempting a hostile takeover?

      FTA: "We have already received inquiries from several HP shareholders and are encouraged by their interest in our offer,” Visentin added." And now Xerox have released the names of all of them:

      Mr Carl Icahn

      Mr Karl Bicahn

      Mr IMNT Cicahn

  2. Claverhouse Silver badge
    Pirate

    One of the Mysteries of the Free Market...

    ...is why people who don't want to sell their company should be forced to do so.

    Not because these wretched corporate rapists could be like the stinking asset-strippers of yore even; nor even since people who have worked somewhere for years may see their toil ultimately benefiting people they don't care for; but because no means no.

    1. Imhotep

      Re: One of the Mysteries of the Free Market...

      I've been through a couple of these as both stockholder and employee, and I agree.

      Oddly enough, in both cases it was a smaller company buying, and the merged company management was inferior to the original.

      *Anheuser-Busch by InBev, the other I can't discuss.

      1. MyffyW Silver badge

        Re: One of the Mysteries of the Free Market...

        InBev - and the firm hand on the scythe that is 3G Capital.

        There is a special place in hell for those boys from Brazil.

    2. LDS Silver badge

      Re: One of the Mysteries of the Free Market...

      That's the risk of being publicly traded - and without anybody with a controlling quote. Nobody asks you to be traded, though, you can keep the company private and nobody can try to get it out of your hands without your approval.

      The actual board can say no - but if someone buys enough shares it can change the board. Anyway the "owner" of the company are the shareholders, not the board - those are the "people" that eventually count.

      1. Blackjack

        Re: One of the Mysteries of the Free Market...

        No.

        That's the risk of Leveraged Buy Outs and negative rates.

        1. Anonymous Coward
          Anonymous Coward

          Re: One of the Mysteries of the Free Market...

          But the risk rarely occurs if a company is doing well.

          HP Ink are under pressure from all quarters, but particularly in enterprise printing as Canon is surging. Long term, PC's/laptops are declining, the consumer printing market is declining and HP Ink needs to downsize to match their revenue.

          Add in $4.5bn in bank loans and EBT being significantly lower than net earnings and I can see why investors/banks are nervous and looking for an exit strategy...

        2. LDS Silver badge

          Re: One of the Mysteries of the Free Market...

          An hostile takeover has nothing to do with LBOs - you can use LBO for an hostile takeover or for a friendly one.

          The fact that LBOs can end very bad burdening the acquired company with too much debt doesn't depend if the takeover is hostile or not. Sure, if you work for a company you may like a LBO far less than other ways, but if you just sell your shares you may not care less... you get money, not debt.

          Any public company without anyone holding a real controlling stake is under a take over risk - and the money used for the take over may not come from any debt - company with a lot of cash can easily try to take over others. Even if today they prefer buy-backs and pump their own share prices.

    3. eldakka Silver badge

      Re: One of the Mysteries of the Free Market...

      One of the Mysteries of the Free Market...is why people who don't want to sell their company should be forced to do so.

      I don't understand what you mean.

      That's like saying "One of the mysteries of democracy is why people who don't want Trump as their president should be forced to take him as their president".

      The company is not the 'boards" company.

      A majority of shareholders has to agree to a takeover for it to occur. Whether that be by a specific vote on a takeover, or by directly selling their shares to the entity wishing to do the takeover - who now owns the majority of shares so therefore is the majority owner.

      The only "forcing" happens once a majority of shareholders agree, and the holdouts are forced to sell because they are no longer in the majority.

      Once a company goes public (or stays private but starts selling ownership, i.e., shares) , it is no-longer "a persons" company. Facebook is not Zuckerberg's company. Google isn't Larry Page or Sergey Brin's company. Those people are the founders, but once they listed 'their' companies, they are no longer 'their' company, they are the shareholders company.

      1. john.jones.name

        actually

        it is no-longer "a persons" company. Facebook is not Zuckerberg's company...

        sorry thats VERY misinformed

        in the case of Facebook it has a DUAL class share holding... same for Google

        Bob Pisani at CNBC estimated earlier this year that Zuckerberg and the group of insiders control almost 70 percent of all voting shares in Facebook. Zuckerberg alone controls about 60 percent.

        for google it has dual-class structure that included class B stock with 10 votes per share for existing investors, and class A stock with one vote per share for the public so guess who controls google...

        the same can be said of companies like VW in germany where the workers union has a "golden ticket" so no matter what happens they get an outsized say in what happens

        ALWAYS look at the class of share your getting...

        1. Charlie Clark Silver badge

          Re: actually

          VW in germany where the workers union has a "golden ticket"

          This is not the case: the golden share is actually held by the governement of Lower Saxony.

    4. Dave K Silver badge

      Re: One of the Mysteries of the Free Market...

      HP doesn't belong to the board however, it belongs to the shareholders.

      It's the risk you take when you float the company. When you do this, you effectively are raising cash by selling pieces of the company to various shareholders. Can be great to give you a chunk of capital for investment/expansion, but you lose control of aspects of the company as well. Only way to be in complete control of your company from an executive level is to keep it in private ownership.

      1. jmch Silver badge

        Re: One of the Mysteries of the Free Market...

        "Only way to be in complete control of your company from an executive level is to keep it in private ownership."

        Or do it the Google / Facebook way and sell a class of shares that are entitled to dividends but not to a vote in decision-making (or a much-diluted vote)

  3. Marketing Hack Silver badge
    WTF?

    I wonder why Xerox is so fixated on this HP merger.

    A company with three times the market valuation of Xerox, that is struggling to show growth in revenues, that has been through what must be by now a double-digit number of restructurings and layoffs, a company that at least in the past had a very different culture from buttoned-down Xerox, and it has no detectable new products in the pipeline that will help in doing more than treading water. This is the company that Xerox thinks will turn around its fortunes?

    1. rcxb Bronze badge

      Re: I wonder why Xerox is so fixated on this HP merger.

      Sounds like a desperation move. When fortunes are declining, a big PR stunt can get a brief influx of cash. Plus they have a bottled excuse for their declining fortunes... the merger isn't doing its magic just yet, maybe next year. The gigantic mess would be cover-up Xerox's own problems for a while.

    2. Imhotep

      Re: I wonder why Xerox is so fixated on this HP merger.

      I think for both companies the problem is that people just don't require hard copies much anymore.

      Merging both companies is a little bit like a buggy whip manufacturer buying a horseshoe manufacturer to address the sales lost because people are buying cars.

      1. Chris G Silver badge

        Re: I wonder why Xerox is so fixated on this HP merger.

        Maybe it just boils down to Xerox execs pushing this through to build a house of cards, getting a fat bonus and cutting and running before anyone else huffs and puffs and blows the whole thing down.

      2. Anonymous Coward
        Anonymous Coward

        Re: I wonder why Xerox is so fixated on this HP merger.

        "...people just don't require hard copies much anymore"

        Not sure about that - top-of-the-line printer speeds are up in the kppm, and the manufacturers are not pushing that kind of speed (and cost) without there being a demand for it. Also, of course, paper is just one of many print media nowadays; others include clothing, wall & floor coverings, solid objects, packaging, etc.

      3. vtcodger Silver badge

        Re: I wonder why Xerox is so fixated on this HP merger.

        the problem is that people just don't require hard copies much anymore.

        Exacerbated in HP's case by the fact that getting a (reasonably properly formatted) hard copy from a PC or smart phone has been increasingly problemetic in recent decades. Especially in recent years when Microsoft's OTA Windows updates have had a tendency to deconfigure printer drivers. I've lost count of the number of times frustrated family members have eMailed me stuff to print for them. When you're reduced to using Linux to get your stuff printed, you should know that you're in trouble.

    3. Mark 85 Silver badge

      Re: I wonder why Xerox is so fixated on this HP merger.

      The "master" corporate raider (Icahn) is a stock holder in both which should say something about this deal. Probably plan would be to merger, self off the profit making parts, sell off anything else they can, and make a tidy profit.

    4. Anonymous Coward
      Anonymous Coward

      Re: I wonder why Xerox is so fixated on this HP merger.

      Xerox and HP have a common competitor - Canon.

      HP is losing market share to Canon while Xerox is struggling to gain market share against Canon's copiers/MFP/printers portfolio.

      The merger would put Xerox on a similar footing to Canon. Whether the Xerox salesforce can compete with the Canon salesforce is a seperate question that only a merger could answer.

      It's likely to see another round of acquisitions/mergers in the printer/MFP/copier market but that's inevitable given that the market is shrinking as consumers move to digital and higher-capacity/higher-speed products consolidate requirements.

      1. Anonymous Coward
        Anonymous Coward

        Re: I wonder why Xerox is so fixated on this HP merger.

        My last experience of a Canon salesperson made me decide that I wouldn't have one on the premises ever again. It was like an unstoppable killer robot with a massive contract. I swear even the false eyelashes were carbon fiber.

        Xerox would do better buying Kalashnikov, if they're for sale.

      2. LeahroyNake Silver badge

        Re: I wonder why Xerox is so fixated on this HP merger.

        I have heard that Canon have been downsizing their sales force in the UK, they may even be planning to sell off their large format devision that they bought from OCE a few years ago.

        Don't know how true either statements is but from experience there is much less profit available on both small and large format print to support huge teams of sales and account managers.

    5. vtcodger Silver badge

      Re: I wonder why Xerox is so fixated on this HP merger.

      It would seem to me that a desire to own HP can only be explained by the presence of dangerous amounts of mind-altering substances in the drinking water in Norwalk, CT. They really should get someone to test it.

  4. luis river

    Greed break sac

    · Being behind the IPO investor Carl Icahn operation sure is performed, Enrique Lores CEO and his senior managerial I think are all wrong, 33.5 billion does not underestimate a company that as the how only jewel of the Crown it has the "3D Printer" , the rest are simply "boxes", any can made

  5. chuckufarley

    IMNSHO...

    ...Icahn wanted HPE to buy Xerox and when he didn't get his way he decided to do the maths back to front.

    1. AIBailey Silver badge

      Re: IMNSHO...

      It does seem to be the wrong way around.

      I wonder what would happen if HP decided to try and turn the tables and launch a hostile takeover of Xerox instead?

    2. Charlie Clark Silver badge

      Re: IMNSHO...

      It may well end up like that, but he was able to get more Xerox shares faster and thus put more pressure on Xerox's board. In the world of high fianance, it doesn't really matter which way round the merger goes. The aim is to boost margins by increasing market share and sacking people.

  6. Aladdin Sane Silver badge
    Pint

    Don't think I've seen El Reg use a Mad Men pic before

    In the words of Bertram Cooper, 'Bravo'.

  7. TeeCee Gold badge
    Alert

    “Your refusal to engage in mutual due diligence..."

    Very weird, particularly as HP should have the in-house expertise required to make the books say whatever they want to a potential buyer. <cough>Autonomy<cough>.

  8. Luiz Abdala Bronze badge
    Trollface

    License to Print Money.

    Does it have something to do with the fact that HP sells The Most Expensive Liquid™ on the planet, that cost them only 20p per liter to procure?

    That's a 33bn dollar fact.

    1. whoseyourdaddy

      Re: License to Print Money.

      ITYM the liquid that doesn't convert to a solid before the rare occasion I actually print something at home?

      Carefully engineered not to bork a printer that was sold at a loss to begin with?

  9. Danger Mouth
    Trollface

    New Merged Company Name

    Xerox could provide the leading X and HP could provide the trailing P, so that the new merged company could have a merged name that reflects its place in the modern world :-)

    1. LeahroyNake Silver badge

      Re: New Merged Company Name

      Character Xerox attacks for 15 damage, defender size AP of 30 negates 15 damage. Damage done - 15. Both parties receive +15 mana stock for 6 turns.

  10. Anonymous Coward
    Anonymous Coward

    How can a company worth $8B buy a company worth $30B, how do they finance this?

    Maybe the HP board should just retaliate and buy Xerox instead.

    Still think HP is a better brand than Xerox

    This seems a bit like the Co Op trying to buy Wallmart doesn't make a lot of sense.

  11. Dwarf Silver badge
    Joke

    But what about R&D

    The problem is that Xerox never come up with anything original

    Yes, Yes, I know the whole WIMP thing, but then the pun doesn't work, so overlook it, right ..

  12. Jay Lenovo Silver badge

    We've got tonight, who needs tomorrow

    It appears Xerox shareholders are desperate to save their own sinking ship, by leveraging a raid on HP.

    All powered on a debt leveraged buyout of inflated stock value. Who needs who?

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019