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Xerox goes on charm offensive to woo HP investors

By Hugh Wilson

Slap-up dinner intends to whet appetites for $35bn takeover bid

Printer manufacturer Xerox will hold a dinner for HP investors this week in an attempt to gain support for its $35bn (£26.8bn, €32.2bn) takeover bid.

Xerox recently upped its bid by $2 to $24 a share and announced its intention in January to try to replace the entire HP board at the company’s shareholder meeting in April.

HP’s board has so far unanimously rejected the hostile bid and is expected to dismiss the sweetened offer when it releases quarterly earnings next week. It believes the offer significantly undervalues the company, which is nearly four times the size of Xerox.

In response, computer and printer-maker Xerox will woo investors at a dinner in Connecticut on Tuesday, February 18, sources told Reuters. Xerox CEO John Visentin is expected to attend.

Xerox believes that combining the companies would lead to $2bn in cost synergies, as both companies chase similar customers in a declining printer market. HP has disputed this figure.

Billionaire investor Carl Icahn, who owns significant shares in both businesses, said late last year that combining the companies was a “no-brainer”. He added that both HP and Xerox were operating in shrinking but still potentially profitable markets.

But while initial contacts between the businesses were viewed as constructive, dialogue has descended into a public war of words in recent months as Xerox has pursued ever more aggressive tactics.

In January Xerox announced that it had nominated 11 people to replace HP’s current board of directors, a move HP rejected as “a self-serving tactic by Xerox to advance its proposal, that significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders”.

FURTHER READING: Xerox secures $24bn financing for proposed HP takeover

FURTHER READING: HP beats profit forecasts due to higher PC sales

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