Troubled printer and copier manufacturer may attempt to buy its storied PC and printer rival
Call it a minnow trying to swallow a whale. According to published reports, Xerox is looking to buy its much larger rival HP in a blockbuster deal that would reshape the printer and PC landscape.
The Lowdown: According to the Wall Street Journal, Xerox is planning to make a cash-and-stock deal to acquire HP Inc. The deal, if it comes to fruition, would see Xerox — which has $10 billion in annual revenue and a market capitalization of $8 billion — take over HP, which has $58 billion in annual revenue and a market cap of $27 billion.
The Details: Neither Xerox nor HP is commenting on the reports, and there’s no guarantee that anything will come of the speculation. Sources tell the Wall Street Journal that Xerox has informal support for the deal from a major bank. Additionally, Xerox is selling its stake in Fuji Xerox, which should raise $2.3 billion.
The Impact: A Xerox-HP merger would reshape the technology landscape. HP, which is the bigger of the two brands, would likely prevail as the moniker of the new company. The deal would result in significant job reductions around the world as the new company would seek to cut costs through the elimination of redundancy. The impact on the two companies’ respective channels would be most felt in the printer segment, where there’s the greatest overlap. Another likely outcome is the spin-off of HP’s 3D printing division, which is not core to either of the companies.
Background: Xerox is still finding its way after splitting from its professional services business in 2016, which formed the new business Conduent, and the failed merger with FujiFilm in 2018.
HP formally launched its sweeping global reorganization last week, in which it replaced its three global regions with 10 economic market zones to eliminate redundancy and increase go-to-market efficiency.
Both companies are looking to decrease costs and increase efficiency to remain viable in a market that’s increasingly competitive in hardware and shifting more toward service models.
In June, HP and Xerox announced an expansion of their printer partnership. Under the arrangement, Xerox would source some A4 and A3 printer products from HP; HP would source some toner and other printer supplies from Xerox. Also, Xerox became a member of HP’s Partner First program to resell printers, PCs, displays, and devices as a service.