Xerox secures funding for hostile HP bid
Xerox presses on with takeover plan despite HP's board digging its heels in
Xerox has secured $24bn (£18.25bn) in financing for its unsolicited bid to take over printer rival HP.
In a letter to HP's CEO Enrique Lores, Xerox boss John Visentin confirmed that the vendor has obtained financing to push through a takeover, suggesting that the loan should allay any doubts HP shareholders have over Xerox's ability to afford the transaction.
"It also became clear from our dialogue with your shareholders that you and your advisors have been questioning our ability to raise the capital necessary to finance our proposal," Visentin said.
"We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho and Bank of America."
Xerox's first offer was made public at the start of November, with the print vendor offering $27bn.
However, HP's board swiftly rejected the overtures of its smaller competitor.
Xerox's market cap is less than a quarter of HP's - standing at around $7.88bn compared with HP's $29.83bn.
HP, which is currently in the process of a restructuring that will include job losses of up to 9,000 staff, was then met by threats of a hostile bid of $34bn by Xerox.
Xerox's board expressed its determination to "expeditiously pursue our proposed acquisition of HP to completion" with "no cause for further delay".
However, five weeks on, the acquisition is still uncertain, and in the interim, the most vocal public supporter of the deal - Xerox's activist investor Carl Icahn - is being sued by another shareholder, who alleges Icahn bought a stake in HP knowing Xerox's bid plan.
Icahn holds 4.24 per cent worth of HP stock, below the five per cent that would have required him to disclose his position, as well as a 10.6 per cent stake in Xerox.
Xerox CEO John Visentin is now calling on HP's board to continue negotiations over a merger.