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Xerox and HP Inc wrestling match update

10 January 2020

This week, Xerox's CEO John Vesentin made public that Xerox has arranged to borrow the cash they would need to back up their offer to buy HP Inc.

HP Inc had suggested that Xerox would not be able to come up with the cash to back up their 33 billion dollar offer for HP Inc, and Vesentin was keen to affirm that it would be possible.

HP Inc's response has been to reiterate their view that they are worth a whole lot more than the 33 billion dollars Xerox has offered; that they provide long-term value for their shareholders. They have very little debt, huge shares of the personal printer and personal computer markets, profitable positions in other print markets (Indigo!) - and ownership of (what used to be) Samsung's huge printer design and manufacturing centres in South Korea.

Also this week, Fuji Xerox - the Japanese company that currently manufactures all of Xerox's copiers and markets them in the third of the world in which Xerox has no presence - has made two announcements. They will not supply Xerox with photocopiers from March 2021 - and they are removing Xerox from their name.

All in all, Xerox needs HP a whole lot more than HP needs Xerox.

Xerox's share value is up 64% over this tme last year, but a year ago Xerox was in a very bad place.

Xerox's "activist" investor Icahn will soon have to defend himself for buying a few billion dollars worth of HP Inc shares with the knowledge that Xerox was about to bid for them. This said, HP Inc's shares have hardly risen this last year.

No one doubts that HP Inc and Xerox could, would or even will do well together. The question is, who will wrestle control of the resulting behemoth?

Ladies and gentlemen, in the red corner, the tag team of Carl Icahn and John Vesentin; in the blue corner, the HP Inc board.

It looks to me that time is on HP Inc's side. What will their shareholders do? What will Icahn/Vesentin to do next?

Watch this space!

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