Printer manufacturer Xerox announced today that it will nominate a full slate of 11 candidates to replace rival HP Inc.’s board of directors at HP’s 2020 annual stockholder meeting. The move is the latest salvo in a tense back-and-forth as Xerox aggressively pursues a merger with its fellow legacy printing giant.
HP’s initial response was quick and curt.
“These nominations are a self-serving tactic by Xerox to advance its proposal, which significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders,” a company spokesperson said in a statement.
The two companies have faced falling consumer demand for printers in recent years and have previously discussed the possibility of a merger. Xerox made a direct takeover offer in early November, which HP’s board of directors unanimously rejected on the grounds that the $33.5 billion offer undervalued HP.
Xerox responded by saying it would move forward with a hostile bid, vowing to make its case directly to HP’s shareholders.
The candidate slate from Xerox includes several prominent current and former senior executives from major companies, including former Verizon Executive Jeannie Deifenderfer, former Hilton Hotels CEO Matthew Hart and former Aetna Executive Vice President Thomas Sabatino Jr.
Xerox said it chose the roster based on the candidates’ expertise at overseeing major company overhauls and mergers, and asserted that HP shareholders had told Xerox that its acquisition proposal would bring “tremendous value.”
“We believe HP shareholders will be better served by a new slate of independent directors who understand the challenges of operating a global enterprise and appreciate the value that can be created by realizing the synergies of a combination with Xerox,” Xerox CEO John Visentin said in a statement.
HP later released a longer statement, arguing that a Xerox merger isn’t the only path to create long-term value for HP shareholders, and the company would pursue its own strategies.
“Xerox’s proposed transaction attempts to use HP’s financial capacities for the benefit of Xerox shareholders,” the company wrote.
The statement also called out Carl Icahn, founder of New York-based holding company Icahn Enterprises and one of Xerox’s largest shareholders. The statement claimed that Icahn’s ownership gives him influence over Xerox’s board of directors, and he would stand to disproportionately benefit from the merger under Xerox’s proposed terms.
The company added that it would review the proposed Xerox nominees and respond “in due course,” and said it would provide information about its own board’s recommended slate of directors in advance of the 2020 annual meeting, which does not yet have a scheduled date.
HP was created in 2015 as the successor to Hewlett-Packard after the company spun off its enterprise services division to create Hewlett Packard Enterprise. The printer and personal computer divisions remained with the retitled HP Inc.
HP is based in Palo Alto, Calif., but has a strong local presence dating back to 1979 when predecessor Hewlett-Packard began operating in Vancouver. The local arm of the company at one time employed thousands of workers before it outsourced its printer manufacturing, but it remains one of Clark County’s largest employers.
HP’s local operations are currently based out of two office buildings at the Columbia Tech Center — a main office building that it shares with PeaceHealth and a 58,000-square-foot expansion office ,which it opened in 2016.
That same year, the company ramped up its 3D printing efforts with the introduction of the Multi-Jet Fusion line of industrial 3D printers, its first major foray into the 3D printing market segment. The Vancouver facility is at the heart of the company’s 3D printing research and development. Xerox has a large production facility in Wilsonville, Ore.
In December, the city of Vancouver announced that HP plans to purchase 68 acres of the former English Pit gravel mine site to build a new corporate campus, which would eventually replace the company’s current local facilities. The initial phase of the project would cost at least $50 million, with much of the space left for future investments.
HP’s stock jumped upward this morning, rising from $21.93 at the opening to a high point of $22.15 and then hovering around $22.10 during the afternoon.