HP-Xerox saga: How we got here and where we might end up
How Xerox's pursuit of HP has panned out so far
The HP-Xerox debacle has taken a small step towards a conclusion, with HP revealing that it is now willing to "engage" with Xerox over a potential tie-up.
Until HP published its quarterly results overnight an agreement couldn't have been further away, with a period of not-so-passive-aggressive letter exchanging culminating in Xerox revealing plans to take over HP's board.
Xerox had already seen an offer for HP spectacularly rejected, and then gone about whipping up support to launch a hostile takeover, before making a second, improved bid.
The copier manufacturer's initiation of a potential merger came as it desperately sought a way to reverse its ailing fortunes.
Its numbers have been less than impressive over recent years, culminating in a six per cent revenue decline for the year ending 31 December.
A proposed merger with Fuji Xerox - Xerox's joint venture with Fujifilm - was successful scuppered by activist investor Carl Icahn, leaving Xerox to target HP. Icahn has since taken a stake in HP and pushed for a merger.
After rumours of a merger were revealed, HP confirmed that talks had been occurring, on and off, for a while, later claiming that Xerox chose to walk away from amicable talks last August.
Xerox's official bid came in the following November, but was rebuffed straight away by HP.
In the three months since, various publicly available ‘letters' have been exchanged by the pair, all designed to woo or dissuade HP shareholders from supporting a deal.
HP has always maintained that its own plans for growth are the way forward, claiming Xerox's bid undervalues HP and only benefits Xerox shareholders.
Xerox, meanwhile, claims that a merger would produce $2bn (£1.5bn) in cost savings.
The timeline below outlines the key dates of the saga so far.
What happens next?
It is clear that HP has no intention of endorsing Xerox's current takeover bid. It rejected the first offer of $22 per share and the follow-up of $24, which equates to around $36bn.
HP's market cap is $32bn, around four times Xerox's valuation ($7.54bn).
HP has now adopted a poison pill strategy, which will be triggered if a shareholder take reaches a 20 per cent stake. At this point HP will make additional shares available to everyone else at a discounted price, thereby diluting the shareholder's stake.
The vendor has also announced a $15bn share buyback that will see it divert free cashflow to the scheme and also raise its debt - making any acquisition more difficult for Xerox.
But CEO Enrique Lores indicated that he has not turned his back on Xerox entirely.
On an earnings call he said that HP is willing to explore a potential merger with Xerox, just not through the deal currently on the table.
When asked if he would consider a deal to buy Xerox he sidestepped the question somewhat, but in an interview with the Financial Times he said: "It is not about who buys what, it is really about creating value."
Lores also acknowledged that cost savings would be achievable through a merger, but slated the figure at $1bn, rather than the "overstated" $2bn touted by Xerox.
He also highlighted the fact that there is not a huge amount of crossover between the businesses of the two vendors, saying that HP believes it to be 10 per cent, largely because Xerox does not have a PC business, which would affect cost savings.
Xerox released a statement last week claiming that it would press on with its attempted takeover despite HP's poison pill tactic, but has yet to release a statement following HP's earnings release.
So while the outcome of this saga is still anyone's guess, what seems clear is that it is increasingly unlikely that HP and Xerox will come out of it as separate companies.
Lores' persistent rejection of Xerox's bid, but willingness to go to the table, suggests that he has other ideas in mind.