Please ensure Javascript is enabled for purposes of website accessibility

Xerox Launches Its $24-Per-Share Takeover Bid for HP

By Rich Smith - Mar 2, 2020 at 6:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This is the very definition of a hostile takeover attempt.

Xerox (XRX) wants to buy HP (HPQ 4.01%). I mean, Xerox really wants to buy it. HP doesn't even want to be bought -- and Xerox doesn't care.

This, in a nutshell, is the situation with the ongoing pursuit by Xerox of its rival printer-maker. With HP management uninterested in entertaining acquisition offers, Xerox has said it will take its offer to HP shareholders directly. To that end, today, Xerox launched a tender offer to acquire all of HP's shares from the shareholders who own them.  

Pirates force a businessman to walk the plank

Image source: Getty Images.

Xerox is offering a deal that it values at $24 per HP share, or about $34 billion in total, offering $18.40 cash, and throwing in 0.149 Xerox shares on top of the cash per HP share. Xerox has only about $2.7 billion in cash on hand, however. So to get the rest of what it needs, the company will borrow up to $24 billion from a consortium of banks that includes Bank of America, Citigroup, Credit Agricole, Truist, Mizuho, MUFG, PNC, and Sun Trust Robinson Humphrey.

Xerox is inviting HP shareholders to tender their shares before 5 p.m. on April 21. Because Xerox's goal is to gain control over HP preparatory to a vote to approve a merger, Xerox is conditioning its offer upon (among other things) having a majority of HP shares tendered to it. Failing that, the tender offer may be extended, modified -- or withdrawn.  

To ward off Xerox's hostile takeover attempt, HP has counteroffered to buy back up to $15 billion worth of its shares itself. Coincidentally, HP's offer could also potentially see half of its shares removed from the market. Thus, the more shares HP buys, the fewer there will be remaining to accept Xerox's tender.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

HP Inc. Stock Quote
HP Inc.
$35.23 (4.01%) $1.36
Xerox Corporation Stock Quote
Xerox Corporation

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.