Xerox is stealing a lyric from ’80s pop singer Rick Astley, telling HP that it is never gonna give you up as it continues with its hostile takeover bid of the printing technology powerhouse. The Wall Street Journal and Forbes reported on Monday that Xerox has financing commitments of $24 billion from Citi, Mizuho, and Bank of America of the $33 billion needed to finance the deal.
In a letter addressed to HP CEO Enrique Lores and Chairman Chip Bergh, Xerox CEO John Visentin wrote, “It also became clear from our dialogue with your shareholders that you and your advisors have been questioning our ability to raise the capital necessary to finance our proposal. We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho, and Bank of America.”
This is a huge development in this ongoing saga, and according to some financial analysts, securing this financing could cause HP shareholders who were previously opposed to a deal to reconsider now that concerns surrounding Xerox’s ability to finance the deal have been addressed.
One concern the financing doesn’t address is Xerox’s debt. Forbes reports that HP’s board questions Xerox’s nearly 10% revenue decline since last year, speculating that a combined company would have too much debt.
Meanwhile, Xerox claims the merger would save both companies $2 billion over the next two years and result in revenue growth of up to $1.5 billion over the next three years.
Money talks and we are climbing out onto a sturdy limb to predict that somehow, someway, this deal is going through in 2020. HP may go kicking and screaming all the way, but all signs indicate that Xerox is never gonna give HP up in pursuit of this hostile takeover.
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