Information Technology

Xerox secures $24B loan for hostile HP takeover

January 7, 2020
In the latest development of what's become a hostile takeover saga, Xerox has announced that it's secured $24 billion in financing from Citi, Mizuho and Bank of America to back its proposed acquisition of HP for a reported $33.5 billion.

If completed, the deal would unite two tech giants working to adapt to modern technology. It would also represent a win for activist investor Carl Icahn, who reportedly holds stakes in both companies, and has previously pushed for a takeover.

Executives from both companies have not shied away from expressing their opinions on the deal. Strongly worded letters between HP and Xerox began exchanging hands in November, when Xerox made a $22 per share offer for HP that consisted of $17 in cash and 0.137 Xerox shares for each HP share. HP's board of directors has since unanimously rejected that proposal twice, prompting Xerox to contact HP shareholders directly.

On Nov. 17, HP CEO Enrique Lores and board chair Chip Bergh wrote, on behalf of the board, that the offer "significantly undervalues" the company and is "highly conditional and uncertain."

Xerox CEO John Visentin responded on Nov. 21, writing that its board of directors was "very surprised" by HP's rejection of the takeover proposal. Moreover, Visentin disputed HP's argument that the deal was "uncertain," adding that "there will be NO financing condition to the completion of our acquisition of HP."

The HP board reiterated its stance by responding on Nov. 24 in another letter. The company wrote: "It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information."

The dramatics ensued. Xerox CEO Visentin fired back in a letter two days later, writing: "While you may not appreciate our 'aggressive' tactics, we will not apologize for them."

Now, with a $24 billion loan in the works, it's clear Xerox has stayed true to its word. "My offer stands to meet with you in person, with or without your advisors, to begin negotiating this transaction," Visentin wrote Monday in the latest letter to HP's board of directors.

Palo Alto-based HP has yet to publicly respond to the most recent letter from Norwalk, Conn.-based Xerox. Representatives from HP and Xerox did not immediately respond to PitchBook's emailed requests for comment.

Featured image via Zack Seward/CC BY-ND 2.0

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