Xerox has announced that it will nominate 11 new members to HP’s board of directors in an effort to proceed with the planned acquisition of HP. This highlights once again that Xerox’s takeover plans have become quite hostile.
Xerox’s attempts to take over HP have failed so far. In November last year, the first reports were received about a possible takeover, but in the meantime, Xerox has not had any success. HP made the argument that Xerox’s $33.5 billion bid severely undervalued HP. Xerox then threatened to take the bid directly to HP’s shareholders if no agreement was reached between the two companies’ executives.
Xerox’s new tactic heralds the next chapter in the saga. Xerox will attempt to introduce the 11 potential new directors at HP’s shareholders’ meeting. This means that Xerox wants to replace the entire board of directors, as there are now 12 members and one of that group will leave later this year. Top executives from United Airlines, Verizon, Novartis and Export-Import Bank of the U.S. were listed as options.
Earlier, it became clear that Xerox has the support of Carl Icahn, the activist investor who currently owns 11 percent of HP. Icahn argues that there are other shareholders who are starting to feel more in favor of the acquisition.
“HP shareholders have told us they believe our acquisition proposal will bring tremendous value, which is why we lined up $24 billion in binding financing commitments and a slate of highly qualified director candidates,” said Xerox CEO John Visentin.
HP echoed the announcement of the news: “These nominations are a self-serving tactic by Xerox to advance its proposal, which significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders.”
So now the battle between Xerox and HP really seems to have commenced. The shareholders’ meeting, which will be held this summer, will provide more clarity about the balance in the relationship between the two companies.