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Xerox Corp. amped up its attempt to acquire HP Inc. when, on Monday, the printing and imaging giant said it has lined up $24 billion in financing agreements to help fund its unsolicited buyout efforts.

In a letter sent to HP Chief Executive Officer Enrique Lores and Chairman Chip Bergh, Xerox said it has secured support from Bank of America, Citigroup and Mizuho Financial Group for loans of $24 billion to support its HP acquisition offer. Xerox's current proposal values HP, the former consumer-technology arm of Hewlett-Packard Co., at about $33 billion. The letter, which was signed by Xerox CEO John Visentin, was also posted on Xerox's corporate website.

Visentin said that Xerox has been speaking with many of HP's largest shareholders over the last few weeks, and Xerox believes it is gaining support for its proposed acquisition.

"It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cash flow that could, in turn, enable increased investments in innovation and greater returns to shareholders," Visentin said.

Xerox originally approached HP with a buyout offer in early November. HP has so far refused all of Xerox's advances on the grounds that terms haven't valued HP highly enough, and said Xerox was engaging in "hostile efforts" to acquire the Silicon Valley company. HP also questioned Xerox's financial ability to fund an acquisition, and noted how HP's market capitalization far surpasses that of Xerox. On Monday, HP had a market cap of $30 billion, compared to $7.8 billion for Xerox.

In early December, Xerox said it would take its offer directly to HP's shareholders, setting the stage for a potential proxy fight at HP's next annual meeting. Visentin said Monday he is willing to meet with Lores and Bergh in person, with or without HP's financial advisers, to begin discussions on a deal.

Xerox's acquisition efforts have also been highlighted by the involvement of billionaire activist investor Carl Icahn, who owns stakes in both Xerox and HP. Icahn, who owns 10.6% of Xerox's outstanding shares, as well as a 4.24% stake in HP, has said that a combination of the two tech industry stalwarts is a "no-brainer."

Neither HP, nor Xerox, immediately returned a request for further comment.

The offer is the largest-ever bridge loan in the technology sector, surpassing IBM's $20 billion facility in 2018 for its acquisition of Red Hat Inc., according to data compiled by Bloomberg. The rankings exclude the $51.2 billion bridge loan, which was part of a larger $100 billion debt financing for the failed Broadcom Inc. takeover of Qualcomm Inc. The deal was blocked by President Donald Trump.

"Though Xerox's assertion that the combined company is expected to have an investment-grade credit rating may remain in question, funding should no longer be a concern following $24 billion in binding financing commitments," Bloomberg Intelligence analyst Robert Schiffman wrote on Monday.

Information for this article was contributed by Paula Seligson and Jacqueline Poh of Bloomberg News.

Business on 01/07/2020

Print Headline: Xerox secures $24B in pursuit of HP


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