HP Crafts Poison Pill
to Kill Off Xerox Bid
February 21, 2020
The Board of Directors of HP adopted
a shareholder rights plan and declared a dividend distribution of one
preferred share purchase right on each outstanding share of HP common
The Board adopted the rights plan following the announcement by Xerox
Holdings Corporation that Xerox intends to commence a tender offer to
acquire all of the outstanding shares of HP common stock.
HP has previously said that on February 24, when out of its quiet
period, HP will share additional information about its plan to drive
sustainable long-term value for its shareholders, including through the
execution of the Company’s multi-year strategic and financial plan and
the deployment of its strong balance sheet; and that HP wants its
shareholders to have full information on the Company’s earnings and the
value inherent in the Company before responding to Xerox’s February 10
“HP’s board is focused on creating long-term value for HP shareholders.
We believe it is essential that HP shareholders have sufficient time and
full information when considering any tender offer that Xerox may
commence,” said Chip Bergh, Chair of HP’s Board of Directors. “As we
have previously said, we are very concerned about Xerox’s aggressive and
rushed tactics, and any process that is not based on full information is
a threat to our shareholders.”
The rights will not prevent a combination of HP with another business,
but should encourage Xerox (or anyone else seeking to acquire the
Company) to negotiate with the Board prior to attempting to impose some
combination that is not in the best interests of the HP shareholders.
The rights plan has several recognized shareholder protections,
Guards against coercive tactics to gain control without paying all
shareholders an appropriate premium for that control.
Expiration date in one year (and
the Board of Directors of HP intends to consider whether to terminate
the rights plan earlier than such date if circumstances warrant).
Facilitates the ability of all
shareholders to realize the long-term value of their investment in the
The rights will be exercisable only if a person or group acquires 20% or
more of HP’s common stock, subject to certain exceptions. Each right
will entitle shareholders to buy one one-hundredth of a share of a new
series of junior participating preferred stock at an exercise price of
If a person or group acquires 20% or more of HP’s outstanding common
stock, each right will entitle its holder (other than such person or
members of such group) to purchase for $100, a number of HP common
shares having a market value of twice such price. In addition, at any
time after a person or group acquires 20% or more of HP’s outstanding
common stock (unless such person or group acquires 50% or more), the
Board may exchange one share of the company’s common stock for each
outstanding right (other than rights owned by such person or group,
which would have become void).
to the acquisition by a person or group of beneficial ownership of 20%
or more of the Company’s common stock, the rights are redeemable for
$0.01 per right at the option of the Board.
Certain synthetic interests in securities created by derivative
positions — whether or not such interests are considered to constitute
beneficial ownership of the underlying common stock for reporting
purposes under Regulation 13D of the Securities Exchange Act — are
treated as beneficial ownership of the number of shares of the Company’s
common stock equivalent to the economic exposure created by the
derivative position, to the extent actual shares of the Company’s stock
are directly or indirectly held by counterparties to the derivatives
The dividend distribution will be made on March 2, 2020, payable to
shareholders of record on March 2, 2020, and is not taxable to
shareholders. The Rights will expire on February 20, 2021.