Xerox Said to Weigh a Potential Bid for HP

Xerox's unexpected bid to acquire HP, a company three times its size, is a bold move aimed at combining their PC and printer businesses. The merger could create strong synergies, with the PC business providing cash flow and the printer business offering high margins. Regulatory challenges may arise due to business overlaps, but restructuring could lead to cost savings. Financing the $20 billion deal is feasible through a mix of stock, bank loans, and bonds, with a 30-50% chance of success.

What is the primary reason Xerox's bid for HP is considered unexpected?

• Xerox has no experience in acquisitions.

• HP is a new company in the market.

• HP is not in the printing business.

• Xerox is a smaller company than HP.

Why might combining Xerox and HP's businesses be beneficial?

• It would create a monopoly in the PC market.

• The combined businesses would have strong operating margins.

• It would eliminate competition in the printing sector.

• The merger would double the revenue immediately.

What is a major consideration for regulators regarding the Xerox-HP deal?

• The effect on consumer electronics prices.

• The impact on global stock markets.

• The potential for increased PC sales.

• The overlap in the printing business.

How does Xerox plan to finance the acquisition of HP?

• By selling off its existing assets.

• Through a combination of stock, bank loans, and bonds.

• By increasing the prices of its products.

• Through government subsidies.

What is the estimated probability of the Xerox-HP deal being successful?

• 60% to 80%

• 10% to 20%

• 90% to 100%

• 30% to 50%