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Why would they put that on their website? And why the informal tone? It's weird.
S— it Xerox.
Relax, everything will be fine. Carl is known for his compassion towards employees.
It’s going to be a car crash (for workers and customers)
HP’s response read as a clinical, critical review of Xerox’s challenges. Xerox’s response read like someone who is very upset that someone had the nerve to challenge their business plan.
A couple of observations:
• “We have already received inquiries from several HP shareholders and are encouraged by their interest in our offer” - Anyone want to take best that this is Icahn himself as he now owns 4.24% of HP and this is to apply pressure of other shareholders?
• Overall, Xerox seems to forget that HP makes more than just printers, thus “Total Contract Value,” i.e. annuity business, is a lot more important to Xerox’s total revenue than HP’s.
• Xerox did not address that fact that it’s restructuring efforts, including the sale of its ownership in Fuji Xerox, wiped-out it’s R&D investments that when tied to outsourcing a material portion of its workforce raises the question as to what its future business strategy is. Right now, it seems to be ‘buy someone else’s products and slap a Xerox label on it
• Xerox seems to be arguing that having no Asia Pac presence, which is the one growing market in this business, is not a ‘whole’ in its portfolio.
• Also, why Xerox insists that its debt will still be investment grade after this proposed transaction, the market does not seem to agree. Xerox’s current debt rating is BB and HP’s is BBB and Icahn has a history of saddling companies with massive debt.
• As a FYI, King & Spalding as the law firm that Icahn and Deason used to kick-out the prior Xerox board and CEO.
• Anyone find it interesting that our CEO signs his letter John? I’m not even sure that constitutes a legal signature as it’s not his full name.
Xerox Sends Letter to HP
Xerox confirms intention to engage directly with HP shareholders in absence of mutual due diligence
NORWALK, Conn, Nov 26, 2019
Xerox Holdings Corporation (NYSE: XRX) (“Xerox”) today sent a letter to the Board of Directors of HP Inc. (NYSE: HPQ) in response to HP’s November 24, 2019 letter to Xerox.
The full text of the letter sent to HP is as follows:
Dear Chip and Enrique,
Your refusal to engage in mutual due diligence with Xerox defies logic.
We have put forth a compelling proposal – one that would allow HP shareholders to both realize immediate cash value and enjoy equal participation in the substantial upside expected to result from a combination. Our offer is neither “highly conditional” nor “uncertain” as you claim. It does not contain a financing contingency, and the combined company is expected to have an investment grade credit rating.
The potential benefits of a combination between HP and Xerox are self-evident. Together, we could create an industry leader – with enhanced scale and best-in-class offerings across a complete product portfolio – that will be positioned to invest more in innovation and generate greater returns for shareholders.
The market clearly understands the industrial logic of this transaction. HP and Xerox shares are up 9.5% and 6.6%, respectively, since the date our proposal was first made public. We have already received inquiries from several HP shareholders and are encouraged by their interest in our offer.
Nevertheless, rather than engage with us in three weeks of customary mutual due diligence, HP continues to obfuscate and make misleading statements. It is important that we correct, for your benefit and that of HP’s shareholders, a few of the mischaracterizations from your last letter.
• On February 5, 2019, Xerox announced a three-year strategic plan that was built on four initiatives: (i) optimizing operations, (ii) driving revenue, (iii) reenergizing innovation and (iv) focusing on cash flow and capital returns. We are already outperforming this plan. Through the first nine months of 2019, we have increased our guidance for adjusted earnings per share and free cash flow while also increasing investments in innovation and our core business, which is why our stock is up 96% year-to-date.
• Your comment regarding total contract value is little more than a diversion. Your own public disclosure states that backlog information is “not a meaningful indicator of future business prospects” or “material to an understanding of our overall business.”
• It is possible that the modest, expensive and time-consuming cost savings included in the restructuring plan you announced on October 3, 2019 (only $1 billion over three years at a cost of $1 billion in restructuring charges), has resulted in a lack of confidence in HP’s ability to realize the $2+ billion of synergies your team previously agreed could be achieved in a combination.
• We monetized our illiquid interest in Fuji Xerox at over 20 times 2019 expected aggregate cash flow while favorably restructuring the terms of our sourcing relationship with Fuji Xerox to ensure continuity of supply, protect our high-value intellectual property and provide strategic flexibility.
There is no “hole in Xerox’s portfolio” as a result of those transactions – just significantly more cash to support growth and greater flexibility in our sourcing terms.
While you may not appreciate our “aggressive” tactics, we will not apologize for them. The most efficient way to prove out the scope of this opportunity with certainty is through mutual due diligence, which you continue to refuse, and we are obligated to require.
We plan to engage directly with HP shareholders to solicit their support in urging the HP Board to do the right thing and pursue this compelling opportunity.
Vice Chairman and CEO
Xerox Holdings Corporation
Citigroup Global Markets Inc. is acting as Xerox’s financial advisor and King & Spalding LLP is providing legal counsel to Xerox and the board of directors. Willkie Farr & Gallagher LLP is providing legal counsel to Xerox’s independent directors.
In the era of intelligent work, we’re not just thinking about the future, we’re making it. Xerox Holdings Corporation is a technology leader focused on the intersection of digital and physical. We use automation and next-generation personalization to redefine productivity, drive growth and make the world more secure. Every day, our innovative technologies and intelligent work solutions—Powered by Xerox®—help people communicate and work better. Discover more at www.xerox.com and follow us on Twitter at @Xerox.