Xerox Holdings Corp. has launched its hostile takeover bid of Hewlett Packard Inc., beginning with an investor presentation made available to HP shareholders on Monday.

“There is a clear path to realizing increased value from your investment in HP—the proposed transaction with Xerox,” Xerox Vice Chairman and CEO John Visentin wrote in the 33-page presentation.
In November, Xerox officials reached out to HP executives requesting due diligence surrounding a proposition to acquire HP for $22 per share, which would comprise $17 in cash and 0.137 Xerox shares for each HP share. The proposal closely followed news that Fujifilm Holdings Corp. would buy out Xerox’s one-quarter share in Fuji Xerox, a 52-year partnership that soured last year during a failed merger attempt.
The $2.3 billion buyout gave Xerox the leverage it needed to pursue acquisitions, with Visentin telling one media outlet last month that the company was in “attack mode.”
But HP answered Xerox’s proposal by saying it “significantly undervalues HP and is not in the best interests of HP shareholders.” Still, HP left the door open for a potential combination that would put the computer giant in the driver seat.
Had HP accepted the proposal its shareholders would have owned roughly 48 percent of the combined company. The offer represented a 20 percent premium to HP’s closing share price of $18.40 on Nov. 5.
HP at the time said its board had considered the “highly conditional and uncertain nature” of the proposal, including the impact of outsized debt levels on the combined company’s stock.
The two companies traded barbs, and on Nov. 24 Xerox said it would attempt a hostile bid by going straight to HP’s shareholders. HP officials noted Xerox’s declining revenue, perceived versus real synergies and a host of other issues that could affect company value.
In Monday’s shareholder presentation, Visentin said the value of the transaction “goes beyond economics.”
“In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way,” he wrote, noting that the cash flow generated by the deal would enable rapid de-leveraging and greater capital returns for shareholders.
The presentation suggests cost savings for the combined company of roughly $2 billion in two years and projects $1 billion to $1.5 billion of potential growth opportunities. Xerox says the combined company would be worth roughly $31 per share.
Xerox officials are looking for three weeks of mutual due diligence on the offer.
Shares of company stock (NYSE: XRX) were down slightly at $37.31 midday Monday.
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