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Xerox Wins $24 Billion In Financing For HP Takeover

Xerox CEO John Visentin is urging HP’s CEO to meet with him 'with or without your advisors, to begin negotiating this transaction,' he wrote in an open letter published Monday.

Xerox has won financial backing from three banks to the tune of $24 billion as it ratchets up the pressure to take over rival printer manufacturer HP, the company said in a letter to its rival.

“(Y)ou and your advisors have been questioning our ability to raise the capital necessary to finance our proposal,” Xerox CEO John Visentin wrote in an open letter Monday. “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.”

The pledge of financing shows that major financial institutions—Citigroup Inc., Mizuho Financial Group and Bank Of America—support the revenue projections and logic behind the acquisition, which could yield $2 billion in cost synergies, according to Xerox sources who spoke with The Wall Street Journal.

[RELATED: 5 Things To Know About A Potential Xerox-HP Deal: ‘The Copier King And The Printer King Combined’]

Xerox made what amounted to a $22 a share offer to buy the much larger HP on Nov. 5 in a combined cash and stock deal that gave HP $17 per share, plus .137 in Xerox stock for each share of HP. That offer contained an informal funding commitment from Citigroup, according to Xerox.

In his letter Monday, Visentin said over the last several weeks, Xerox has had “constructive” talks with some of HP’s largest shareholders. While not revealing any by name, Visentin claims multiple shareholders support the two companies coming together.

“It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cash flow that could, in turn, enable increased investments in innovation and greater returns to shareholders,” he wrote.

Following the Nov. 5 offer, Xerox and HP traded public letters, with HP excoriating the proposed deal by saying it doubted Xerox’s revenue and synergy projections.

“(T)here continues to be uncertainty regarding Xerox’s ability to raise the cash portion of the proposed consideration and concerns regarding the prudence of the resulting outsized debt burden on the value of the combined company’s stock even if the financing were obtained,” HP’s board wrote to Visentin on Nov. 24. “Consequently, your proposal does not constitute a basis for due diligence or negotiation."

Visentin also has asked to meet with HP CEO Enrique Lores and board chairman Chip Bergh.

“My offer stands to meet with you in person, with or without your advisors, to begin negotiating this transaction,” Visentin wrote in the letter.

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