As promised, Xerox CEO John Visentin has taken his case for uniting with HP to HP’s shareholders, courtesy of an exhaustive 33-page presentation outlining the merits of the proposed transaction. The following is the introductory letter from Visentin:
Dear HP Shareholder,
There is a clear path to realizing increased value from your investment in HP—the proposed transaction with Xerox.
We are offering a combination of cash and stock with an aggregate implied value of ~$31 per share (an 82% premium to HP’s unaffected 30-day volume weighted average price1) comprised of the following components:
• $17 per share in cash, which equals 100% of HP’s unaffected 30-dayvolume weighted average price1; and
• 48% of the pro forma combined company, which we believe is worth ~$14 per share, without multiple expansion or revenue synergies.
In this presentation, we provide an overview of the value of our offer and two of the most important opportunities created by a combination — cost synergies and revenue synergies. By harvesting these synergies, which can only be realized with this combination, the new pro forma company will be both more profitable and better positioned to provide customers with a stronger mix of products, services and support than either company can do on its own.
The value of the transaction goes beyond economics. In consolidating industries, first movers not only win but also have an opportunity to reshape the competitive landscape in an enduring way. The increased cash flow generated by this deal will allow for rapid de-leveraging, greater capital returns to shareholders and enhanced investment in innovation that can put these storied brands at the forefront for decades to come.
We strongly encourage you to urge HP’s Board of Directors to pursue this transaction on a friendly basis, starting with the provision of mutual due diligence.
