HP Confirmed Xerox Potential Takeover Offer To Save Over $2 Billion

In a written statement from HP Inc, Palo Alto has confirmed that there is a takeover offer from Xerox Holdings Corporation. “We have had conversations with Xerox Holdings Corporation from time to time about a potential business combination. We have a record of taking action if there is a better path forward and will continue to act with deliberation, discipline and an eye toward what is in the best interest of all our shareholders.”

As for this November 2019 announcement, the potential deal between these giant brands, Xerox and HP, would literally reshape the printer and computer industry. Apparently, HP is 3 times bigger than Xerox. It seems that the size of the discrepancy in market values makes this deal hard to digest. Xerox could take over printer and computer maker HP with a cash-and-stock bid. In the new digital era, the down trend of demand for printing-pages, two companies may unite to save over $2 billion. Xerox could get HP’s cash flow and be able to reduce costs by significant job cuts.

Regarding the advantages about this move, we must examine the courses and the benefits amid the combination of the companies.

Background of Xerox and HP

In 1906, Xerox was founded as the Haloid Photographic Company. Before splitting into HP and Hewlett-Packard Enterprise Co. in 2015, Hewlett-Packard was founded in 1939. Both Xerox and HP became household brand names over the decades then. HP’s profit mainly comes from its printer business, but printer ink sales drop along the current digital era. When the need for printed pages drop in the market, companies like Xerox and HP are at the stage of consolidation.

Value of Xerox and HP

Look for the current market value, HP is 3 times bigger than Xerox, i.e. $27 billion vs $8 billion. That implies that a successful takeover of Xerox over HP would probably be facilitated by making a premium offer to HP’s stock price. As said, the takeover may result in the cutting cost of the employment power. From what HP said on October, HP could cut 9,000 jobs over 3 years and save $1 billion annually. Besides, Xerox is running a $640 million cost-savings program called Project Own It, it’s on the road of meeting the target.

All in all, the merge of these two companies may help the companies to save over $2 billion. Undoubtedly, for those well-developed brands like these 2 renowned brands in PC and printing industry, the line-up would probably send a clear message of transformation upon the changes of time.