One thing’s for certain during the course of Xerox’s pursuit of HP. Both parties are not shy about sending replies on the weekend.
Last Saturday, HP penned a response to Xerox CEO John Visentin, reiterating its rejection of the $33.5 billion cash-and-stock acquisition offer. HP stood by its position that the offer is “highly conditional and uncertain,” and once again questioned Xerox’s ability to raise the cash portion of the proposed consideration while expressing concerns regarding the prudence of the outsized debt burden on the combined company’s stock.
Consequently, HP said the proposal “does not constitute a basis for due diligence or negotiation.” In other words, there is nothing more to discuss based on Xerox’s current offer.
The letter, signed by HP’s Enrique Lores and Chip Bergh, continued that HP is not dependent on a combination with Xerox, and that the manufacturer has a strategy and numerous opportunities to drive “sustainable long-term value.” The letter also called attention to private discussions held between the companies in August and September, and reminded Visentin that HP had voiced concerns at that juncture, which went unanswered.
“It is clear in your aggressive words and actions that Xerox is intent on forcing a potential combination on opportunistic terms and without providing adequate information,” the letter said. “When we were in private discussions with you in August and September, we repeatedly raised our questions; you failed to address them and instead walked away, choosing to pursue a hostile approach rather than continue down a more productive path. But these fundamental issues have not gone away, and your now-public urgency to accelerate toward a deal, still without addressing these questions, only heightens our concern about your business and prospects. Accordingly, we must have due diligence to determine whether a Xerox combination has any merit.