Intends to Launch Tender Offer for All of HP’s Outstanding
Shares
Xerox Holdings Corporation (NYSE: XRX) (“Xerox”) today announced
its intention to launch a tender offer on or around March 2, 2020
for all of the outstanding shares of common stock of HP Inc. (NYSE:
HPQ) (“HP”) at a price of $24.00 per share, which will be comprised
of $18.40 in cash and 0.149 Xerox shares for each HP share.1 The
tender offer will not be subject to any conditions related to
financing or due diligence.
Feedback from HP Stockholders
Xerox has met, in some cases multiple times, with many of HP’s
largest stockholders. These stockholders consistently state that
they want the enhanced returns, improved growth prospects and
best-in-class human capital that will result from a combination of
Xerox and HP. The tender offer announced today will enable these
stockholders to accept Xerox’s compelling offer despite HP’s
consistent refusal to pursue the opportunity.
Immediate Value Creation
The value created by the synergies realized in a combination of
Xerox and HP is incremental to any value that HP can create by
revising its strategic plan or dramatically changing its capital
allocation policy to incorporate additional share repurchases.
Xerox’s offer provides HP stockholders with both significant,
immediate cash value, and meaningful upside via equity ownership in
the combined company. The headline offer price of $24.00 per share
represents a 41% premium to HP’s unaffected 30-day volume weighted
average trading price of $17.00. The implied offer value of ~$33
per share2 represents a 94% premium to HP’s unaffected 30-day
volume weighted average trading price of $17.00.
The Tender Offer
The tender offer will be subject to there being validly tendered
and not withdrawn at least a number of shares representing a
majority of the issued and outstanding shares of HP and other
customary conditions for a transaction of this type.
Citi is acting as Xerox’s financial advisor, and King &
Spalding LLP is providing legal counsel to Xerox. Willkie Farr
& Gallagher LLP is providing legal counsel to Xerox’s
independent directors, and Moelis & Company is acting as
financial advisor to Xerox’s independent directors.
For additional details on the offer, the benefits of the
transaction to both companies’ stockholders, and the Xerox
management team, please visit www.XplusHP.com.
About Xerox
Xerox Holdings Corporation (NYSE: XRX) makes every day work
better. We are a workplace technology company building and
integrating software and hardware for enterprises large and small.
As customers seek to manage information across digital and physical
platforms, Xerox delivers a seamless, secure and sustainable
experience. Whether inventing the copier, the Ethernet, the laser
printer or more, Xerox has long defined the modern work experience.
Learn how that innovation continues at xerox.com.
Forward-Looking Statements
This communication, and other written or oral statements made
from time to time by management contain “forward-looking
statements” as defined in the Private Securities Litigation Reform
Act of 1995. The words “anticipate”, “believe”, “estimate”,
“expect”, “intend”, “will”, “should”, “targeting”, “projecting”,
“driving” and similar expressions, as they relate to us, our
performance and/or our technology, are intended to identify
forward-looking statements. These statements reflect management’s
current beliefs, assumptions and expectations and are subject to a
number of factors that may cause actual results to differ
materially. Such factors include but are not limited to: our
ability to address our business challenges in order to reverse
revenue declines, reduce costs and increase productivity so that we
can invest in and grow our business; our ability to attract and
retain key personnel; changes in economic and political conditions,
trade protection measures, licensing requirements and tax laws in
the United States and in the foreign countries in which we do
business; the imposition of new or incremental trade protection
measures such as tariffs and import or export restrictions; changes
in foreign currency exchange rates; our ability to successfully
develop new products, technologies and service offerings and to
protect our intellectual property rights; the risk that multi-year
contracts with governmental entities could be terminated prior to
the end of the contract term and that civil or criminal penalties
and administrative sanctions could be imposed on us if we fail to
comply with the terms of such contracts and applicable law; the
risk that partners, subcontractors and software vendors will not
perform in a timely, quality manner; actions of competitors and our
ability to promptly and effectively react to changing technologies
and customer expectations; our ability to obtain adequate pricing
for our products and services and to maintain and improve cost
efficiency of operations, including savings from restructuring
actions; the risk that confidential and/or individually
identifiable information of ours, our customers, clients and
employees could be inadvertently disclosed or disclosed as a result
of a breach of our security systems due to cyber attacks or other
intentional acts; reliance on third parties, including
subcontractors, for manufacturing of products and provision of
services; the exit of the United Kingdom from the European Union;
our ability to manage changes in the printing environment and
expand equipment placements; interest rates, cost of borrowing and
access to credit markets; funding requirements associated with our
employee pension and retiree health benefit plans; the risk that
our operations and products may not comply with applicable
worldwide regulatory requirements, particularly environmental
regulations and directives and anti-corruption laws; the outcome of
litigation and regulatory proceedings to which we may be a party;
any impacts resulting from the restructuring of our relationship
with Fujifilm Holdings Corporation; the shared services
arrangements entered into by us as part of Project Own It; the
ultimate outcome of any possible transaction between Xerox Holdings
Corporation (“Xerox”) and HP Inc. (“HP”), including the possibility
that the parties will not agree to pursue a business combination
transaction or that the terms of any definitive agreement will be
materially different from those proposed; uncertainties as to
whether HP will cooperate with Xerox regarding the proposed
transaction; the ultimate result should Xerox determine to commence
a proxy contest for election of directors to HP’s board of
directors; Xerox’s ability to consummate the proposed transaction
with HP; the conditions to the completion of the proposed
transaction, including the receipt of any required shareholder
approvals and any required regulatory approvals; Xerox’s ability to
finance the proposed transaction with HP; Xerox’s indebtedness,
including the substantial indebtedness Xerox expects to incur in
connection with the proposed transaction with HP and the need to
generate sufficient cash flows to service and repay such debt; the
possibility that Xerox may be unable to achieve expected synergies
and operating efficiencies within the expected time-frames or at
all and to successfully integrate HP’s operations with those of
Xerox; that such integration may be more difficult, time-consuming
or costly than expected; that operating costs, customer loss and
business disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers or suppliers)
may be greater than expected following the proposed transaction or
the public announcement of the proposed transaction; the retention
of certain key employees may be difficult; and general economic
conditions that are less favorable than expected. Additional risks
that may affect Xerox’s operations and other factors that are set
forth in the “Risk Factors” section, the “Legal Proceedings”
section, the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section and other sections of
Xerox Corporation’s 2018 Annual Report on Form 10-K, as well as in
Xerox Corporation’s and Xerox Holdings Corporation’s Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K filed with the
SEC. These forward-looking statements speak only as of the date of
this communication or as of the date to which they refer, and Xerox
assumes no obligation to update any forward-looking statements as a
result of new information or future events or developments, except
as required by law.
Additional Information
This communication relates to a proposal that Xerox has made for
a business combination transaction with HP. In furtherance of this
proposal and subject to future developments, Xerox (and, if
applicable, HP) may file one or more registration statements, proxy
statements, tender offer statements or other documents with the
Securities and Exchange Commission (the “SEC”). This communication
is not a substitute for any proxy statement, registration
statement, tender offer statement, prospectus or other document
Xerox and/or HP may file with the SEC in connection with the
proposed transaction.
Xerox has not yet commenced the tender offer referred to in this
communication, and this communication does not constitute an offer
to buy or solicitation of an offer to sell any securities. Upon the
commencement of any tender offer, Xerox will file a tender offer
statement with the SEC. Investors and security holders of Xerox and
HP are urged to read the proxy statement(s), registration
statement, tender offer statement (including an offer to purchase,
a related letter of transmittal and other offer documents),
prospectus and/or other documents filed with the SEC carefully in
their entirety if and when they become available as they will
contain important information about the proposed transaction. Any
definitive proxy statement(s) or prospectus(es) (if and when
available) will be mailed to shareholders of Xerox and/or HP, as
applicable. Investors and security holders will be able to obtain
free copies of these documents (if and when available) and other
documents filed with the SEC by Xerox through the web site
maintained by the SEC at www.sec.gov, and by visiting Xerox’s
investor relations site at www.xerox.com/investor.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, Xerox and its directors and
executive officers and other members of management and employees
and the candidates identified by Xerox in the notice of its
intention to nominate such candidates for election at HP’s 2020
Annual Meeting of Stockholders (the “Xerox nominees”) may be deemed
to be participants in the solicitation of proxies in respect of the
proposed transactions, including with respect to HP’s 2020 Annual
Meeting of Stockholders. You can find information about Xerox’s
executive officers and directors in the Current Report on Form 8-K
filed by Xerox Holdings Corporation with the SEC on July 31, 2019,
the prospectus filed by Xerox Holdings Corporation with the SEC on
April 23, 2019 and the Annual Report on Form 10-K for the year
ended December 31, 2018 filed by Xerox Corporation with the SEC on
February 25, 2019. To the extent holdings of Xerox securities by
Xerox’s executive officers and directors have changed from the
amounts of securities of Xerox Corporation (the predecessor issuer
to Xerox Holdings Corporation) held by such persons as reflected in
the prospectus filed by Xerox Holdings Corporation with the SEC on
April 23, 2019, such changes have been or will be reflected on
Statements of Change in Ownership on Form 4 filed with the SEC.
Information about the Xerox nominees will be included in the proxy
statement Xerox intends to file with the SEC should Xerox determine
to commence a proxy contest for election of directors to HP’s board
of directors. Additional information regarding the interests of
such potential participants will be included in one or more
registration statements, proxy statements, tender offer statements
or other documents filed with the SEC if and when they become
available. These documents (if and when available) may be obtained
free of charge from the SEC’s website www.sec.gov, and by visiting
Xerox’s investor relations site at www.xerox.com/investor.
Note: To receive RSS news feeds, visit
https://www.news.xerox.com. For open commentary, industry
perspectives and views, visit http://twitter.com/xerox,
http://www.facebook.com/XeroxCorp,
https://www.instagram.com/xerox/,
http://www.linkedin.com/company/xerox,
http://www.youtube.com/XeroxCorp.
Xerox® is a trademark of Xerox in the United States and/or other
countries.
1 Based on Xerox’s closing share price of $37.68 on February 6,
2020.
2 HP’s share of pro forma combined company conservatively valued
at ~$15/share by applying unaffected P/E multiple to the combined
company’s pro forma net income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200210005275/en/
Media: Caroline Gransee-Linsey, Xerox, +1-203-849-2359,
Caroline.Gransee-Linsey@xerox.com
Investor: Ann Pettrone, Xerox, +1-203-849-2590,
Ann.Pettrone@xerox.com Edward McCarthy, D.F. King & Co., Inc.,
+1-212-269-5550, EMcCarthy@DFKing.com
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