Xerox said it plans to bring a full slate of new directors to HP's annual shareholder meeting in an attempt to overthrow HP's existing board via shareholder vote. The nominees include current and former board members from Ally Financial, American Airlines, Cognizant Technology Solutions, Jefferies, and Wynn Resorts.
"We believe HP shareholders will be better served by a new slate of independent directors who understand the challenges of operating a global enterprise and appreciate the value that can be created by realizing the synergies of a combination with Xerox," said Xerox CEO John Visentin.
In response, HP called the nominations a "self-serving tactic by Xerox to advance its proposal," and maintains that Xerox's offer undervalues HP and "creates meaningful risk to the detriment of HP shareholders".
The move is the latest in a string of contentious back-and-forth communications between the two companies after HP staunchly rejected a buyout offer from Xerox back in November.
Xerox offered to pay $22.00 per share for HP, consisting of 77% cash and 23% stock, or $17 in cash and 0.137 Xerox share for each HP share. HP's board unanimously rejected the bid, arguing that the offer significantly undervalued HP and was not in the best interest of its shareholders. HP has a market value of $27 billion, about three times the size of Xerox.
Xerox then sent another letter to HP's board of directors, urging the company to reconsider its buyout offer or else it would take its case directly to HP's shareholders. From there, HP's board of directors sent a fairly blunt reply to Xerox as well as Icahn Enterprises essentially telling Xerox that it just isn't good enough financially to buy a much larger company.
Undeterred, Xerox began to pitch the buyout to HP's shareholders, arguing that the increased cash flow of a combined HP/Xerox would help pare debt, increase capital returns to shareholders and drive greater investment in innovation. Xerox also said HP has key market gaps in segments where Xerox is strong, such as Office A3 and managed services.
The saga continued earlier this month when Xerox announced that it had secured $24 billion of binding financing commitments from Citi, Mizuho and Bank of America to support its proposed combination with HP. In a letter to HP shareholders, Xerox's CEO said the financing commitment was meant to dispel concerns that Xerox couldn't raise the necessary capital to fund its buyout proposal.
HP quickly shot down the funding commitment, saying it was irrelevant because Xerox's buyout offer was still too low.