Xerox Holdings Corp. said it intends to nominate 11 directors to replace the board of HP Inc. after the personal-computer maker refused to engage in takeover talks, according to a statement Thursday.
The iconic printer maker hasn’t increased its US$22-a-share takeover offer after HP rejected its proposal, which it argues undervalues the company. Instead, Xerox will seek to replace HP’s entire board through a proxy fight to push the merger through.
HP’s board currently has 12 members. Dion Weisler, the former chief executive officer of the company, has said he would step down at the next annual general meeting, which the company said would reduce the board size to 11. Its last annual meeting was on April 23.
The nominees include former senior executives from dozens of companies including Aetna Inc., United Airlines Holdings Inc. and Novartis AG.
“HP shareholders have told us they believe our acquisition proposal will bring tremendous value, which is why we lined up US$24 billion in binding financing commitments and a slate of highly qualified director candidates,” said John Visentin, vice chairman and chief executive officer of Xerox. A representative for HP wasn’t immediately available for comment.
The move marks an escalation of the simmering tensions between the two hardware giants that have withered in a world increasingly driven by software. Xerox has argued the tie-up would revive both companies and unlock about US$2 billion in synergies.
HP in November rebuffed an unsolicited, cash-and-stock offer from Xerox, citing concerns about the financial health of its smaller rival, which has experienced declining annual revenue since 2012.
HP’s board said it was open to exploring a merger, but believed the offer undervalued the company. Activist shareholder Carl Icahn, who owns about 11 per cent of Xerox and has a 4.3-per-cent stake in HP, has pushed for the tie-up.
Xerox announced Jan. 6 that it had arranged a US$24 billion loan with a group of banks to finance the takeover. HP and its advisers had questioned Xerox’s ability to raise the money for the deal.
Following the financing announcement, HP said it believed the offer still undervalued the company.
Xerox’s director nominees are:
-Betsy Atkins, CEO of Baja Corp.
-George Bickerstaff, co-founder and managing director of M.M. Dillon & Co.
-Carolyn Byrd, CEO of GlobalTech Financial
-Jeannie Diefenderfer, who spent 28 years at Verizon
-Kim Fennebresque, who was CEO of Cowen Group for nine years
-Carol Flaton, who has served as a managing director at AlixPartners
-Matthew Hart, who most recently served as president and chief operating officer of Hilton Hotels until the buyout of Hilton by Blackstone in 2007
-Fred Hochberg, who was most recently the chairman and president of the Export-Import Bank of the United States during the Obama administration.
-Jacob Katz, who was chairman of Grant Thornton
-Nichelle Maynard-Elliott, who most recently served as executive director of mergers & acquisitions for Praxair Inc.,
-Thomas Sabatino, Jr. who most recently served as executive vice president and general counsel of Aetna Inc.
Citigroup Inc. is acting as Xerox’s financial advisor, and King & Spalding LLP is providing legal counsel to Xerox. Willkie Farr & Gallagher LLP is providing legal counsel to Xerox’s independent directors.