In what could become yet another consolidation within the electronics hardware industry, Xerox Holdings is considering an offer to take over HP Inc. In terms of the size, HP is a much larger company and is valued at $27 billion. The Wall Street Journal, WSJ, which reported this development, says the offer is for a cash-stock deal.
Xerox is expecting to receive a sum of $2.3 billion from a stake sale in the joint ventures it had been part of, with the Japanese company Fujifilm Holdings Corp. WSJ also reports that Xerox has received the commitment from some bank for funding the takeover of HP if it were to materialise. There is however no certainty that this deal will go through.
It cannot be denied that from the purely business point of view, both Xerox and HP are passing through a critical phase. The company’s major revenue stream is through the renting and maintenance of large format printers and copiers it manufactures. The general sense is that with the expansion of the internet and several applications associated with communications, the need for copying has come down globally and the business is bound to taper down.
HP, arguably the largest manufacturer of PCs and laptops in the world along with Lenovo, has been facing its own challenges with the mobile devices eating into its volumes and the predications for the future not looking so bright. Its printers are also declining in terms of sales volumes. The company has brought in a new CEO and he is busy trying to cut costs and preparing the company for the trying times ahead. There is a move to do away with as much as 16% of the employee strength.
These are the reasons some experts feel it is time the companies joined hands to take advantage of the size and the product mix to fight at the marketplace.