In a shocking announcement, HP has confirmed that it has received a proposal from Xerox for acquisition. Rumors were flying around in the industry for the past few days about the move. There is no guaranty whether HP would consider the offer or Xerox will able to put through a proposal that would convince a company three times of its size to accept.
A deal would join two fading giants of the past. Both companies raised to highest in the later parts of the last century. And interestingly both companies have inspired Steve Jobs to start Apple. Xerox’s visual interface was the original inspiration for Apple’s and later Windows’ user interfaces.
It is very unlikely that Xerox with a market cap of $8 Billion would be able to raise the cash and stocks to buy a company with a cap of $27 Billion. But in Xerox’s favor, the company will receive $2.3 Billion from selling its stake in the Fujixerox joint venture. Xerox has also received a strong financial from a reputed bank according to people related to the matter.
Hewlett-Packard, one of the early stars of Silicon Valley was split into two companies in 2014 with HP Inc receiving Printers and PCs and HP Enterprises controlling its software and servers. HP Inc, based in Palo alto, is still one of the largest makers of PCs and filed a revenue of $58 Billion in the last fiscal year.
Here is the official statement from HP on the matter
“As reviewed at HP’s most recent Securities Analyst Meeting, we have great confidence in our multi-year strategy and our ability to position the company for continued success in an evolving industry, particularly given the multiple levers available to drive value creation.
Against this backdrop, we have had conversations with Xerox Holdings Corporation (NYSE: XRX) from time to time about a potential business combination. We have considered, among other things, what would be required to merit a transaction. Most recently, we received a proposal transmitted yesterday.
We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye towards what is in the best interest of all our shareholders.”