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MarketScreener Homepage  >  Equities  >  Nyse  >  Xerox Holdings Corporation    XRX

XEROX HOLDINGS CORPORATION

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Potential Xerox Bid For HP Weighs Down Bond Prices

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11/06/2019 | 01:24pm EST

By Matt Wirz

Xerox Holdings Corp.'s potential takeover of HP Inc. provided a lift to shareholders of both companies Wednesday. For bondholders, not so much.

The planned cash-and-stock offer from Xerox could be funded in part by borrowing more debt. That prospect sent bond prices for both the potential target and acquirer tumbling.

HP's $1.2 billion bond due 2041 fell about 7.5% to 105 cents on the dollar following a report in The Wall Street Journal about the possible acquisition. HP currently has a triple-B investment-grade credit rating, but Xerox has a double-B credit rating, which places it on the highest rung of the junk-debt category.

Xerox's bond due 2039 fell to about 99 cents on the dollar from 104 cents on Tuesday, according to data from MarketAxess. The bonds had risen Tuesday after the company's announcement that it would sell a 25% stake in its joint venture with Fujifilm Holdings Corp. for $2.3 billion.

HP stock jumped about 11% Wednesday morning, while Xerox rose about 1%.

Printer manufacturer Xerox is part-owned by activist investor Carl Icahn, and the company has been cutting costs this year while pursuing a large acquisition. The market value of HP, which principally makes personal computers, had dropped about 10% this year before the Journal's report.

Xerox will have about $2.7 billion of cash on hand and $4.3 billion of debt at the end of the year, after accounting for the Fujifilm stake sale and a bond payment coming due in December, according to research firm CreditSights. HP has a market value of $27 billion.

U.S. government bond yields slid lower Wednesday, retracing part of the selloff earlier in the week when detente in the U.S.-China trade war prompted risk-on trading. The yield on the benchmark 10-year Treasury note recently traded at 1.823%, according to Tradeweb, down from 1.865% Tuesday. Yields fall as bond prices rise.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, dropped slightly to 90.79 Wednesday from 90.80 Tuesday after a two-day rally.

Write to Matt Wirz at matthieu.wirz@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
EURO / US DOLLAR (EUR/USD) 0.02% 1.11223 Delayed Quote.-2.47%
FUJIFILM HOLDINGS CORPORATION 0.34% 5261 End-of-day quote.24.79%
HP INC. -0.39% 20.35 Delayed Quote.-0.54%
ICAHN ENTERPRISES L.P. -0.31% 60.94 Delayed Quote.6.76%
MARKETAXESS HOLDINGS INC. 1.20% 373.89 Delayed Quote.76.94%
US DOLLAR INDEX -0.23% 97.18 End-of-day quote.0.51%
XEROX HOLDINGS CORPORATION -0.75% 36.84 Delayed Quote.86.44%
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Financials (USD)
Sales 2019 9 098 M
EBIT 2019 1 144 M
Net income 2019 663 M
Debt 2019 2 823 M
Yield 2019 2,74%
P/E ratio 2019 12,6x
P/E ratio 2020 13,4x
EV / Sales2019 1,19x
EV / Sales2020 1,19x
Capitalization 7 964 M
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Technical analysis trends XEROX HOLDINGS CORPORATION
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Mean consensus HOLD
Number of Analysts 8
Average target price 40,20  $
Last Close Price 36,84  $
Spread / Highest target 27,6%
Spread / Average Target 9,12%
Spread / Lowest Target -18,6%
EPS Revisions
Managers
NameTitle
John Visentin Vice Chairman & Chief Executive Officer
Steven John Bandrowczak President & Chief Operating Officer
Keith Cozza Chairman
William F. Osbourn Chief Financial Officer & Executive Vice President
Naresh K. Shanker Chief Technology Officer & Senior Vice President
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