HP Announces Huge Share Buyback And Xerox Offer

HP plans to explore a combination with Xerox for first time since its rival launched a $35bn hostile takeover bid, as the Palo Alto-based PC and printer maker announced an aggressive plan to return up to $16n to its shareholders in the next three years.  
While the move to return about half of HP’s market capitalization to investors is a de facto poison pill to block Xerox’s takeover approach initiated last year, the company’s chief executive told the FT that a deal was possible under varied terms, including HP buying its smaller rival.  
“We are willing to engage with them,” Enrique Lores, the chief executive of HP said in an interview over the phone. “It is not about who buys what, it is really about creating value.”  As part of the plan announced on Monday afternoon, HP said that it would repurchase at least $8bn worth of HP shares over the next 12 months. By 2022 it planned to buy back $7bn more worth of stock and generate savings of $1.2bn.
HP’s response came as it reported quarterly earnings that were well ahead of analysts’ expectations and lifted its forecasts for the rest of the year. The capital return plan is far more aggressive than the financial goals HP outlined at an analyst meeting in October, shortly before Mr Lores became CEO. 
Speaking on Monday, however, he brushed off the suggestion that it had taken Xerox’s bid to prompt HP to act, and instead said he had wanted to unveil a strong set of results to Wall Street before laying out the plan. “Our three-year financial targets reflect a company at the top of its game, combining the industry’s best innovation with disciplined cost management and aggressive capital returns to support a compelling investment in both the short and long term,” said Mr Lores.