Xerox Holdings Corp. said today that it has secured $24 billion in “binding financing commitments” from a trio of banks to carry out its proposed acquisition of HP Inc.

Norwalk, Connecticut-based Xerox is currently attempting a hostile takeover of HP for $33.5 billion. The printer and copier maker has argued that joining forces would put the companies in a better position to boost their stagnated revenue growth, but its acquisition offer was rejected soon after it was submitted last November.

HP’s leadership argues that the $33.5 billion bid “significantly undervalued” the company. HP, with its market capitalization of over $30 million, is worth about three times as much as Xerox. The company generated more than $58 billion in revenues during its 2018 fiscal year, while Xerox closed the year with sales of about $10 billion.

The $24 billion worth of financial commitments Xerox has nabbed should aid its leadership’s efforts to make a deal happen. After HP rebuffed its offer late last year, Xerox launched a proxy fight in an attempt to appeal to the company’s shareholders directly and have the deal pushed through that way. HP argued to shareholders that Xerox may struggle to raise the necessary capital for a deal, a potential obstacle which the newly secured funding aims to remove. 

“It has also became clear from our dialogue with your shareholders that you and your advisors have been questioning our ability to raise the capital necessary to finance our proposal,” Xerox Chief Executive Officer John Visentin wrote today in a public letter addressed to the HP board. “We have always maintained that our proposal is not subject to a financing contingency, but in order to remove any doubt, we have obtained binding financing commitments (that are not subject to any due diligence condition) from Citi, Mizuho and Bank of America.”

Xerox said in an investor presentation last month that a merger with HP would facilitate revenue growth of $1 billion and $1.5 billion within three years. Furthermore, the company claims that it could cut operating costs by more than $2 billion annually through measures as consolidating information technology operations.

One of the most prominent shareholders to have backed the deal so far is activist hedge fund manager Carl Icahn, who owns a 4% stake in HP’s stock and controls about 11% of Xerox. He has publicly made the case for the companies to merge.

Photo: Xerox