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Xerox considers HP takeover bids



Xerox Holdings Corp.


XRX 4.90%

has put the spotlight on a takeover of personal computers and printers

HP Inc.,


HPQ 2.22%

a bold move that would unite two fading stars of technology.

Xerox is considering offering a cash-and-offer offer to HP, which has a market value of around $ 27 billion, according to people familiar with the matter. The copier's board discussed the opportunity Tuesday, the people said.

There is no guarantee that Xerox will follow up on an offer or that it will succeed. HP, which installed a new CEO just last week, is more than three times the size of Xerox, and any bid will be a premium to the current share price, the people said.

Jobs in Xerox's favor: It expects a $ 2.3 billion fallout from an agreement to sell shares in joint ventures with

Fujifilm Holdings Corp

, which was announced Tuesday along with the dismissal of a lawsuit plus $ 1

billion plus filed against Xerox by the Japanese technology company.

Xerox has also received an informal financing commitment from a large bank, known as a "very confident letter," the people said.

An agreement would join two household names with retained deliveries that have shrunk to retell the business as the need for printed documents decreases. Both companies are in cost-saving mode and a union could afford new opportunities to cut expenses – worth more than $ 2 billion, the people said.

Xerox, based in Norwalk, Conn., Primarily manufactures large printers and copies machines and most of the nearly $ 10 billion in annual revenue comes from renting and maintaining them for businesses. HP, based in Palo Alto, California, mainly sells smaller printers and printing supplies and is also one of the largest PC manufacturers in the world. It had sales of more than $ 58 billion for the last fiscal year, which ended in October 2018.

HP remains what remains after Hewlett-Packard Co. divided itself

Hewlett Packard Enterprise Co.

, which sells servers, data storage equipment and related services to corporate customers, in 2015. Prior to a decline in print supplies business in recent quarters, it had grown faster than expected as a standalone company.

HP's former boss,

Dion Weisler,

said in August that he is leaving the company for family health reasons and would be followed by

Enrique Lores.

Mr. Lores started as an intern 30 years ago and had run the company's printing business since 2015. Mr. Weisler remains on the board.

HP in early October said Mr. Lores would implement a restructuring plan that would reduce the company's ranks by as many as 9,000 people, or 16% of the workforce, and provide $ 1 billion in annual cost savings. The company outlined plans to revive its printing business, which tends to have higher profits but has struggled when customers buy inkjet cartridges elsewhere.

HP historically sold printers at a loss and then made money selling ink cartridges for them. A new sales model will try to lock customers into repeat ink purchases to get a discount at the time of printer purchase. It has also invested in 3D printing.

Given the diminishing confidence of businesses and consumers in the printed page, bankers are considering companies such as Xerox, HP and Japan

Canon Inc.

to be the basis for consolidation.

HP and Xerox shares have been liquidated recently.

Xerox shares are up 84% so far this year after the company launched a cost-cutting program, reported better-than-expected earnings in the third quarter last week and raised the outlook for 2019. The stock rose by about 5% Tuesday on news of the deal with Fujifilm. Xerox CEO

John Visentin

said on its earnings that the company's improved cash flow makes it well positioned to make deals big and small.

Meanwhile, HP's shares are down 10% so far this year. It is estimated to report fiscal revenues for the fourth quarter of November 26.

Billionaire Investor

Carl Icahn

owns a 10.6% stake in Xerox. Icahn started lobbying for changes in the company in 2015. Two years later he started a board game and told The Wall Street Journal that Xerox “will go the way of

Kodak

if there are no major changes. “In 2018, he and

Darwin Deason,

another major shareholder, cast Xerox's planned merger with Fujifilm, took control of the board and replaced the CEO with Mr. Visentin.

Fujifilm sued Xerox in June 2018 for breach of contract and estimated damages of more than $ 1 billion. Fujifilm's lawsuit alleges Xerox unlawfully terminated the merger due to pressure from mr. Icahn and Deason, who argued that the deal underestimated Xerox.

Xerox's agreement with Fujifilm to sell its joint venture shares and close the lawsuit allows Fujifilm to continue to be a major supplier to Xerox.

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