This was immediately dismissed by HP, repeating arguments that the offer undervalues HP, is inequitable to HP shareholders, and would impose heavy debt on any combined business because of the loans needed for Xerox to make its bid. A consortium of banks has been assembled to underwrite the bid, but the offer does not, it seems, include a major portion from Xerox investor Carl Icahn even though he has the personal resources.
In an interview with the Financial Times, Lores agreed with the proposition that there are too many players in the supply of office printers, production print and computers. And HP would participate in any activity to reduce this number.
“Consolidation is going to happen in this space. There are other potential M&A that we are constantly analysing. HP has a very global portfolio and M&A is a way to create value for our shareholders,” he told the paper. That might mean a counter offer from HP for Xerox, something that has been mooted since the proposed deal was announced.
HP's official filings report that Icahn proposed that HP buy Xerox in August last year, later suggesting a price that HP could pay. HP didn’t rise to the suggestion. Xerox has since sold its interests in Fuji-Xerox, raining short term cash but in the longer term leaving it without representation in expanding Asian markets.
HP has a relationship with Canon, sharing IP on thermal inkjet and sourcing some desktop printers from the Japanese company. It warned last week that this arrangement would end should Xerox complete its takeover.
HP has offered to reward shareholders through buy backs returning $15 billion to shareholders over three years, which will either require a steep increase in revenue and earnings or an increase in its corporate debt.