HP Investors Should See Xerox’s Bid as a Selling Opportunity

Xerox (NYSE: XRX) recently made a $33 billion cash-and-stock offer to acquire HP (NYSE: HPQ) for $22-$23 per share. That offer was stunning, since HP's market cap is roughly triple the size of Xerox's, and Xerox would need to take on significant debt to finance the deal, which will reportedly consist of 77% cash and 23% stock.

HP confirmed Xerox's bid but didn't confirm the price. In a statement, HP declared that it would approach the offer "with an eye toward what is in the best interest of all our shareholders."

I personally doubt that Xerox can pull this deal off since its initial offer only values HP at 10 times next year's earnings and it doesn't have much room to raise its bid. However, I think Xerox's bid might represent an exit opportunity for HP's investors.

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Source Fool.com