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Xerox Seeks to Acquire HP, PC Giant Seemingly Confirms

Xerox sent a buyout proposal to HP Inc. on November 5, the PC giant essentially confirmed today. However, HP has not specifically stated whether it will accept or reject the Xerox buyout offer.

A vague statement from HP, issued November 6, said:

“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 (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.”

Xerox Seeks to Acquire HP: Details Leak

The statement didn’t specifically say “buyout” or “company sale,” but anecdotal evidence from The Wall Street Journal indicates Xerox has an HP buyout on its mind.

Chatter about Xerox’s potential HP buyout first surfaced in The Wall Street Journal. According to that report: “There is no guarantee Xerox will follow through with an offer or that one would succeed. HP, which installed a new chief executive just last week, is more than three times the size of Xerox and any bid would be at a premium to its current stock price, the people said.”

In anticipation of the potential bid, Xerox lined up a funding commitment from a major bank, the report says. Xerox generates about $10 billion in annual revenue.

Xerox Seeks to Acquire HP: Alternative Bidders?

The HP statement may be designed to bring additional bidders to the negotiating table. The company’s annual revenue is $58 billion. However, HP’s valuation was about $27 billion ahead of the M&A talk.

The low valuation reflects HP’s heavy dependence on hardware sales. The company recently confirmed plans to cut 7,000 to 9,000 employees as part of a long-term cost cutting plan. 

Both Xerox and HP have been rolling out more managed services and recurring revenue consumption options — including device as a service (DaaS) financial models for customers.

Story updated 5:30 p.m. ET, November 6, to reflect statement from HP.

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