HP is not taking the Xerox takeover bid lying down. Backed by strong Q1 results, it is striking back, even teasing a reverse takeover of Xerox instead.
The Palo Alto-based IT giant has announced a US$16 billion (about half of its market capitalisation) capital return programme for shareholders from 2020 to 2022. It has also increased its share repurchase authorisation by US$5 billion to US$15 billion.
“HP is out of the gate strong in Q1, with outstanding earnings and a robust plan to create significant value for shareholders. Our commitment to HP shareholders is unwavering and it’s abundantly clear the revised Xerox proposal meaningfully undervalues HP, creates significant risk and compromises the future of our company,” said Enrique Lores, President and CEO of HP Inc.
While it believes in industry consolidation, the company reiterated that such a move much benefit its shareholders. It considers the revised Xerox proposal, as undervaluing HP, thereby creating significant risk and compromising its future.
But HP is not closed to any deal with Xerox. It is reaching out to Xerox to explore if there is “a combination that creates value for HP shareholders that is additive to HP’s strategic and financial plan”.