Stop us if you've heard this one before: HP Inc rejects Xerox's $36.5bn buyout plan as takeover saga drags on It's all getting a bit boring but HP Inc's board has again unanimously rejected Xerox's $36.5bn buyout bid, saying it low-balls their valuation of the company and "disproportionately benefits" Xerox shareholders. In a statement issued to investors last night, HP recommended for the umpteenth time that its stock owners do not …
I also read yesterday that Canon has stated that if the Xerox/HP merger were to happen, they would end their 35 year relationship with the company. That would remove about 14% of HP's sales.
Source: https://asia.nikkei.com/Business/Business-deals/Canon-to-cut-ties-with-HP-if-Xerox-takes-over
From the article:
“HP, which buys laser-printer components from Canon, is among the Japanese manufacturer's biggest customers, generating nearly 14% of its sales”
So 14% of Canons sales are components sold to HP. It’s not clear what the impact of that would be to HP Inc or if Xerox make suitable alternatives.
I wasn’t aware HP Inc were so dependent on Canon for parts...
We all knew that HP was just wrapping up parts made by others for PCs.
I thought there was something original in their printer business... How I was wrong.
Remember when Michael Scott explains to kids that all they do is get the paper from the mill then sell it with a markup?
I was a little unfair with my first post. I believe HP did/do make the formatter unit on their lasers, which is the big brain in the machine responsible for translating PS/PDF/PCL into a bitmap image that the engine can actually put onto a piece of paper. These days you can do that with a crappy ARM board and some open source software, but back in the day it was a big deal.
Unsure what Xerox are doing, but based on the other comments it sounds like they have a similar gig going.
You're likely correct - the printer/copier/MFA market has been consolidating for some time, so Canon are likely to merge or acquire as well in reaction to this.
The point is more that the initial scepticism to HP Inc/Xerox becoming one was that it wasn't a good fit - the reality is that HP Inc acquiring Xerox probably would make sense if the board weren't prepared to sit there and watch their market share get taken away while they resell their competitors components.
While I'm not going to suggest the success is guaranteed for the Xerox/HP Inc merger, there are a number of reasons that it could be a very successful venture assuming it isn't weighed down by too much debt and Xerox/HP Inc still have people who can develop new printers.
>Wouldn't they be better off offering the market say upto $30 a share until they've acquired another >36-37% and gained the controlling interest?
Icahn does not have that money, He has some strange idea that Xerox is undervalued and HP overvalued and synergies will make profits soars and finding their "optimal" performance. He's betting the HP board will agree. As always the losers will be HP and Xerox Workforce with massive layoffs and the winner will be the Wall street bankers financing this Utopia.
Like most of the time in this world, the elites put the "scoop" first and then talk, in this case both Xerox and HP inc prefer to go into irresponsible borrowing to get a chair in the direction. Enrique Lores very bad... the only elegant and economically viable outlet is a friendly merger, but it's not for the job. Disappointing. !!
·
I wonder what happens to the non-printing bit of HP Inc once Xerox acquires them. I'd say that the acquisition is all but a certainty at this point, but surely Xerox isn't going to want all the PC bits associated with them?
I was looking at new laptops recently, and HP had some semi-interesting stuff. Trouble is the vultures are circling at almost the speed of sound at this point, and I'm not at all confident about getting support in 18 months time.
"Xerox lacks focus on R&D spending." Somewhat like the pot calling the kettle black. HP (the HP after the RealHP(tm), but before the hideous cluster of rumps HP (HPE et al)) threw research overboard as being so much unnecessary cost center baggage and still has not recovered. Xerox seemed unable to ever monetize the beautiful bits of research they had as in "Xerox PARC' and still can't, if they even have any research organization left.
I view this as: take the best bid and run. Xerox is providing an escape from financial HPerdition; especially now with the markets down and Xerox offering enough non-depressed cash vs. depressed stock. One can usefully buy something better than the taped together combination of two wrecked and sinking ships.
So, the board says its a $hitty deal which would create a bad post deal company:
"The Xerox offer would leave our shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and which would subsequently require unrealistic, unachievable synergies that would jeopardize the entire company."
But the board also says the offer isn't enough:
"The board at HP also said they had received an "inadequacy opinion" from Goldman Sachs and Guggenheim Securities that the offer remains too low."
So if the resulting company is bad due to the massive debt, then how is more money in the deal (and more debt) the solution?
Its just a negotiating strategy!
About all this proposed merger does is take 2 washed up has beens into 1 larger washed up has been. I expect both to shrivel into even smaller husks of their former glory with one possibly joining the Dodos without the merger. Together there is less chance of survival. For once the HP board is showing something resembling intelligence and a spine to telling Xerox to buzz off.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
