Xerox’s audacious bid for HP

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US printer maker Xerox has made a cash-and-stock offer for personal computer maker HP, a company more than three times its size, according to sources.

Xerox has offered roughly US$33bn to acquire HP for between US$22 and US$23 per share, sources say. To help fund the cash portion of the deal, Xerox has lined up financing from Citigroup.

HP has confirmed the bid, but declined to disclose the offer price. In the past the companies have explored a combination, and HP says that it will consider Xerox’s latest proposal “with an eye towards what is in the best interest of all our shareholders.”

Last week Enrique Lores, former president of HP’s imaging and printing business, officially took over as its chief executive.

Xerox has resolved a long-running dispute with joint venture partner Fujifilm, saying on 5 November that it would sell its 25% stake in the joint venture for US$2.3bn. Fujifilm agreed to drop a lawsuit against Xerox.

Wells Fargo analysts write in a note: “We would be left to question Xerox’s ability to finance such a large transaction and the potential overlap the two businesses would face.”

The Wall Street Journal first reported that Xerox was preparing a bid for HP.

HP shares closed 6.4% higher at US$19.57 on 6 November. Xerox shares rose 3.6% to US$37.66, giving the company a market capitalisation of US$8.3bn.

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