Xerox could take over HP, report reveals

According to a new report from the Wall Street Journal, Xerox discussed a possible takeover of HP this Tuesday. Earlier this year, Xerox made a deal to sell stakes in Fujifilm Holdings Corp. and this move immediately led to a 5% share price appreciation. Xerox is doing extremely well this year, since its shares are up 84% on a year-over-year basis. The bid for HP would be in excess of US$27 billion, which is the company's current market value.

In contrast, HP’s shares are down 10%, but the company reported more than US$58 billion in revenues last year, while Xerox only reported a US$10 billion profit for 2018. HP is also three times larger than Xerox and the product portfolio is substantially more diversified, since HP is selling not only printers and consumables, but PC systems and other peripherals, as well. Furthermore, Xerox is focusing on corporate clients, whereas HP has a stronger presence on the consumer markets.

Now, if this merger were to happen, the focus will most likely become the printing business. Xerox did have a PC system branch back in the 70s, 80s and 90s, but it gradually fell out of favor and the company started to focus heavily on printing and photocopy devices in the early 2000s. HP, however, is striking a balance between the printing business and all the other branches. It is quite unclear what would happen to the PC systems branch and all the other smaller businesses if the companies do agree to merge.