Xerox Holdings Corp. has turned up its effort to perform a hostile takeover of HP Inc. another notch, raising its bid for the computer and printer maker to $34 billion from $33.5 billion before.

The company outlined the new proposal in an announcement today that also revealed it plans to launch a tender offer “on or around March 2.” The offer will enable HP investors to sell their stock directly to Xerox while bypassing the HP board, which has rebuffed Xerox’s overtures multiple times in recent months.

The saga began in November when Xerox, which generates about a sixth of the revenue HP does, approached its rival with its original $33.5 billion offer. The proposal was rejected almost immediately. Xerox gradually stepped up its  efforts from there, recently securing $24 billion in loans from a group of banks to help finance the acquisition. 

The new $34 billion offer represents $18.40 in cash and 0.149 Xerox shares for each HP share. Before, the proposal was $17 in cash plus 0.137 Xerox shares per HP share.

Xerox’s argument to HP shareholders is that joining forces would make it easier to deal with headwinds in the printer and copier market. A merger, the company has said in an investor presentation, would make it possible to realize a revenue uplift of $1 billion to $1.5 billion in three years. Xerox further claimed that integrating with HP would save the combined company $2 billion in annual expenses.

The printer and copier maker said today the proposal is garnering significant support on Wall Street. “Xerox has met, in some cases multiple times, with many of HP’s largest stockholders. These stockholders consistently state that they want the enhanced returns, improved growth prospects and best-in-class human capital that will result from a combination of Xerox and HP,” Xerox said today.

One prominent investor who has publicly backed a merger is activist hedge fund manager Carl Icahn. Icahn, who owns 11% stake in Xerox and almost 5% of HP, told the Wall Street Journal, “I think a combination is a no-brainer.”

Alongside the tender offer, Xerox is pursuing a second tactic to push the acquisition through: It plans to ask  HP investors to replace the company’s board with 11 of its own director candidates. A vote is on the matter slated to take place during HP’s shareholder meeting this summer. 

Photo: Xerox