HP expands share buyback program amid Xerox's hostile takeover bid

Multinational information technology company, HP Inc. has recently announced the expansion of its share buyback program. The company has reported better-than-expected first quarter earnings as well as earnings guidance for fiscal year 2022, where it is calling for $3.25-3.65 earnings per share.

The recent financial value creation plan was initiated as a part of HP’s efforts to defend against a hostile takeover bid from Xerox. HP, however, is reaching out to Xerox to explore whether a combination is possible, that creates value for HP shareholders. The HP board has also adopted the shareholder rights plan that would require Xerox to negotiate with the Board before imposing any combinations and eliminating those that are not in the best interests of shareholders.

With an aim to drive the shareholders’ value, the board has authorized HP’s expansion of its total share repurchase deal to $15 billion, which is a hike from $5 billion authorization announced in October 2019. HP will also share details such as drawing on its balance sheet. In total, the company will return $16 billion capital to shareholders over the upcoming fiscal years (2020-2022).

However, an American investor Carl Icahn and shareholder in HP and Xerox, has chastised HP’s board for rejecting the takeover bid of $22 per share from Xerox, claiming that the combination could bring merits to everyone involved. Recently in February, Xerox raised its offer for the takeover bid to $24 per share or around $34 billion.

HP recorded a revenue of $9.89 billion from the Personal Systems segment, which includes PCs. Printing segment accounted for a revenue share of $4.72 billion during the Q1 of fiscal 2019.

Regarding the earning guidance, HP called for earnings of 49-53 cents per share in the Q2 for fiscal 2020. For the entire fiscal year, the company is expecting $2.33-2.43 per share.

HP shares increased by 6% in the extended trading, while revenue declined by 0.6% on an annualized basis in the quarter ended January 2019.

Source credit: