In its latest attempt to acquire HP, Xerox Holdings Corp has upped its ante by placing an additional $2 to its offer. The company announced on Monday that it plans to make an offer to HP to buy its shares at $24 apiece. The move comes after several publicly stated rejections by the PC maker towards Xerox's increasingly aggressive bid to take over the company.
According to Xerox, its offer will be comprised of $18.40 in cash on top of a ratio of 0.149 Xerox shares for every HP share. The offer values HP at around $35 billion. Xerox revealed that it will be making a formal offer to the company sometime around the first week of March.
Following the latest offer, HP's shares surged slightly by around 3 percent to $22.31, while Xerox saw its shares increase slightly by about 1 percent.
Since November, Xerox has been working tirelessly to come up with a deal to acquire HP, a company that is around three times its size. Xerox first made its attempt with a $33.5 billion all-cash offer to merge with the company. HP immediately rejected Xerox's offer, with its board stating that the offer significantly undervalued the company.
Xerox then followed this up with a number of increased offers. Last month, Xerox became aggressive in its bid and stated that it planned to nominate 11 independent candidates into HP's board to force a merger. The company also stated that it had already secured around $24 billion in financing to back up its acquisition bid. The rest of the amount necessary for the bid will apparently be gained through asset sales.
Xerox has continually claimed that a merger would be a win-win situation for both firms and that it would be the best course of action for their longevity and future growth. In December, Xerox mentioned that a merger would result in sales growth of as much as $1.5 billion for the merged company. Earnings would also significantly increase as a result of cost savings from operational synergies, the company claimed.
Analysts have mostly been torn in their forecast of the merger, with some stating that it would be challenging to integrate the two companies given the difference in their products and pricing models. On the other hand, some analysts have pointed out that a merger would be beneficial given in the declining printing and personal computer market.
What is certain for now is that Xerox's increased bid will put added pressure on HP to reevaluate its stance on the merger and reexamine the economics of the possible synergies.
