Fortune - 04.2020

38 FORTUNE APRIL 2020

OHN VISENTIN is speaking with the

simmering impatience of someone

who’s 100% sure his opponents are

100% wrong. “They want to block

us with a poison pill, telling their

investors they aren’t bright enough to

make up their own minds,” he fumes.

“That really annoys me!”

The “they” here is HP Inc. And

Visentin, CEO of venerable printer-

maker Xerox Holdings, is building

a case for one of the most audacious

takeover quests in recent memory.

In November, Xerox made a guppy-devours-

the-whale bid to buy HP, an offer now set at

$35 billion. Today, with a cliffhanger proxy

battle looming, HP’s countermoves are irking

the takeover architect.

Visentin, a plainspoken 57-year-old from

a blue-collar Canadian family, is the antith-

esis of a swashbuckler. He’s a career tech guy

whose résumé includes a few stellar years in

private equity and a stint as an executive vice

president at the old Hewlett-Packard. But he’s

capable of waxing passionate about his plans.

“Printing is long overdue for consolidation,” he

says, during an interview at Xerox’s anony-

mous glass-cube headquarters in Connecticut.

“The potential for cutting costs, for investing

for the future, is tremendous.” HP, he says, is

thwarting Xerox by promising huge share buy-

backs: “How is that investing for the future?”

Thirty years ago, a Xerox-HP takeover

battle might have dominated the headlines.

Today, these aging giants operate far from the

J

spotlight. But they still run richly

profitable printing businesses, gen-

erating cash that could finance the

kinds of transformation that Visen-

tin envisions. What makes his bid

particularly bold is that it has been

decades since a company Xerox’s

size has succeeded in buying a rival

that’s so much bigger. In 2019, Xerox

posted sales of $9.1 billion—less than

one-sixth of the $58.8 billion HP tal-

lied in its most recent fiscal year.

One person’s “bold,” of course, is

another person’s crazy. To finance

the merger, Xerox would take on

$24 billion in new debt. “It makes

no sense because all that debt would

make the combined company much

riskier,” says Bill George, former CEO

of Medtronic and a professor at Har-

vard Business School. HP brass, who

oppose the merger, argue that the le-

verage would threaten the companies’

survival. “You can’t work through

economic cycles with that level of

debt,” says CFO Steve Fieler, who

calls Visentin’s $2 billion in planned

annual savings “unachievable.”

Xerox’s offer—now $24 a share,

a premium of about 20% over HP’s

mid-March stock price—will face

a vote at HP’s annual shareholder

meeting, expected in May. Rooting

for a deal is activist titan Carl Icahn.

He’s Xerox’s largest investor, with an

PAPER CUTTER

Xerox’s Visentin

argues that

steep expense

reductions and

bets on big

digital printers

like the Iridesse

(shown here)

would make an

HP-Xerox merger

pay off.

TECHNOLOGY

Two 20th-century tech giants are duking it out in a hostile-takeover battle,

with the future of a $200 billion industry at stake —and

rabble-rousing investor Carl Icahn watching from the wings.

BY S HAWN TUL LY

INSIDE XEROX’S

AUDACIOUS BID TO BUY HP

PHOTOGRAPH BY

REED YOUNG

XER.W.0420.XMIT.indd 38 FINAL 3/9/2020 6:12:14 PM