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HP promises $16bn returns in 3 years

As Xerox 'wine and dines' HP shareholders, HP makes its own promises.

HP announced a multi-year strategic and financial value creation plan to benefit its shareholders. In this plan, HP is promising to return some USD$16 billion to its shareholders during fiscal 2020 to fiscal 2022. This represents about 50% of HP’s current market capitalisation.

As part of that program, the HP board has increased its current stock repurchase authorisation to $15 billion, from $5 billion. To fund this program, HP plans to use cash and debt capacity.

This proposal appears to be an attempt to dissuade HP stockholders from selling to Xerox, which has upped its offer to $24 per share. As of today, Xerox will still be going ahead with its bid, that is slated for 2 March 2020.

According to some news outlets, Xerox has also been “wining and dining” HP shareholders in an attempt to convince them the acquisition would be in their favour.

In the same statement, HP also said it is open to exploring a partnership with Xerox – if it has better value for its stakeholders. HP called Xerox’s previous proposal as “flawed, irresponsible and overstated.”

HP said that it is not averse to acquisitions, however it must be of benefit to HP shareholders. HP asserted that Xerox’s proposal “meaningfully undervalues HP, creates significant risk, and compromises HP’s future.”

Last week, HP announced a shareholder rights plan, which Reuters termed as a ‘poison pill plan’, in response to Xerox’s intention to acquire all outstanding shares of HP common stock. The shareholder plan has a one-year expiration period and is aimed at preventing investors from accumulating more than 20% stake in the company.

Get caught up:

- HP says no to Xerox's USD$33.5 billion bid

- Xerox secures USD$24 billion to acquire HP

- Xerox snubbed again by HP

- Xerox attempts to replace HP board

- Xerox raises HP offer to $24 per share

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