In a bold, ambiguous and incomprehensible move that has sparked widespread heated debate over the past two days in the tech world, Xerox, a printing and printing machinery company with a market value of about $ 8 billion, made an offer to acquire its counterpart, HP, which has a market value. About $ 27 billion, through a bank-financed deal, sent an offer to HP, which said it was considering, becoming the hottest question on the technology scene now: why is Xerox bidding for three times bigger? Why is HP considering an offer from a company three times smaller? The Wall Street Journal unveiled the Xerox offer in a report posted on its website www.wsj.com recently, dealing with the proceedings of the board meeting «Xerox» last Tuesday. The meeting discussed the possibility of buying HP, the report said, citing informed sources within the board. The following day, Wednesday, November 6, HP issued an official statement through the newsroom on its official website press.ext.hp.com, confirming that it received an offer from Xerox Holding Company in this regard only one day ago. While Xerox did not release official data, HP said in a statement that the offer was reviewed at the last meeting of HP Securities analysts and the company has great confidence in its multi-year strategy and ability. Against this backdrop, we held talks with Xerox Holdings on the potential business mix between us and examined, among other things, what is needed to prove the transaction. Recently, we have received a proposal sent yesterday, and we have a WSSJ method “We are known to take action, if there is a better way forward, and we will continue to work with deliberation, discipline and control of what is in the interest of all our shareholders.”
Xerox and HP
Xerox began in 1906 as Haloid Photography as a photographic supplier in Rochester, New York, and found its way to huge success in March 1960, when its first copier shipped paper The name «Haloid Xerox» was the size of the size of two washing machines, and weighing 648 pounds, after invented the basic imaging technique known as «Xerogroove» by researcher, Chester Carlson, which became the name of the company, and has been widely used in paper copy machines for decades to date, It has evolved over time to break into the printing machine market as well. HP originated in 1938, when Bill Hewlett and Dave Packard rented a garage in Palo Alto, California, invented their first product, a sound oscillator used to test sound equipment, and then invented the first computer in 1966. The first portable scientific calculator in the world in 1972, and now is one of the largest companies producing PCs and printers.
Motivated transaction
According to analysts on Wall Street, the completion of the deal will cause an "earthquake" in the printing industry and the global market, and will be new evidence of the continued decline of the era of paper. The two giants are now in the crosshairs of the rapid and rapid changes in the world of technology and communications that are pushing them to the corner gradually and narrowing the future. Behind them is the power of mobile devices, especially smartphones, cloud computing, edge computing, and other accelerated emerging technologies that change the status of technology, losing ink, paper and printing, to deep digital transitions.
Evidence is abundant. In recent years, both companies have rushed into big revenue-generating projects, but their financial performance confirms that profits are dwindling year after year. For HP, there has been a marked decline in the number of people buying ink, and after the ink sales were the source of great profit for the company, is now incurring losses in sales of printers.
Last month, the company was unstable, with its CEO suddenly stepping down for special reasons and then announcing a restructuring plan that would result in layoffs of between 7,000 and 9,000 employees worldwide, according to its new CEO, Enrique Lloris, as a measure. Crucial to helping the company.
Similarly, Xerox relies on the sale of copiers and printers of all kinds to generate revenue, but sales are declining, and have dropped significantly over the past seven quarters. Moreover, the joint venture with Japan's Fuji, in a deal valued at about $ 6.1 billion, faced several problems and the latest disagreements among major investors. It ended with Xerox's announcement last Tuesday that it planned to abandon it and that it expected to receive On nearly $ 2.5 billion from the sale of its stake in the joint venture with the company «Fuji».
Deal difficulties
The deal is fraught with difficulties and obstacles, primarily the difference in size between the two companies, and that the smaller seeks to acquire the largest, depending on the financing of banks, perhaps up to $ 30 billion, and then it will be dealt with the debt burden at first glance, which puts More challenges for Xerox.
For its part, HP expressed deep challenges to the deal with regard to the risks associated with implementing HP's strategy and changing business models, including online sales, comprehensive and contractual sales, the impact of macroeconomic trends and events, and the need for supplier management. Outsourcing and management of HP's multi-level global distribution network.
common factor
Wall Street analysts said that the two companies have a common factor that drives them to merge or acquire one another, the possibility of achieving a significant reduction in operating expenses and current costs, from the simultaneous reduction of labor, and relying on uniform teams in marketing, sales, supply chains, storage, etc. A well-informed source at Xerox estimated the expected reduction in operating costs after the merger of the two companies was about $ 2.5 billion a year.