HP has issued a letter to its shareholders declaring Xerox to advance its bid, and proposed the board of directors amid the global coronavirus pandemic. Xerox said two weeks ago that it was hitting the pause button in its research to acquire HP while it was still moving forward with its bid and proposed slate.
HP’s board has consistently rejected Xerox’s efforts to force a combination, and now says that a merger would be even dimmer given the current economic environment and the global health crisis.
“It is important for shareholders to understand that under these circumstances and consistent with our fiduciary duties, we believe that we should not waste valuable time, attention and resources on a dialogue with Xerox about their proposed transaction,” HP said in a letter. of shareholders . “Any complex, large-scale, highly leveraged transaction in the current economic environment can be disastrous for HP, its shareholders and our entire ecosystem. While keeping our minds open about M&A as a tool to add value to shareholders, HP at the right time and under the right terms, of course this is not the time. “
HP continues to reiterate its “deep concerns” about the capital structure reflected in the Xerox proposal, which he says will add to HP with a debt level that it will not be able to support.
The current HP board of directors is tied to HP’s leadership and its rejection of the Xerox acquisition offer. Earlier this year, HP announced a three-year strategic financial value creation plan to drive revenue growth. The plan includes a capital repayment program with the goal of returning $ 16 million to HP shareholders during the financial year 2020 through the fiscal year 2022. At the same time, HP said it was arriving at Xerox ” to explore if there is a combination that creates value for HP shareholders that is additive to HP’s strategic and financial plan. ”