Xerox is reportedly considering buying Hewlett-Packard Inc. in what would be a merger of two former American technology giants that have both seen better days.
The Xerox board discussed the possibility of an HP purchase on Tuesday, according to the Wall Street Journal, which cited sources familiar with the matter. The Journal also reported that the Xerox discussions are preliminary and might not lead to an offer for HP. Xerox declined to comment. An HP spokesperson was not immediately available for comment.
A deal would be complicated by the fact that HP is more than three times the size of Xerox: HP has a market value of $27 billion, compared to Xerox’s $8 billion valuation. But Xerox announced Tuesday that it is selling various stakes in former parts of its business, and it will generate $2.5 billion in cash from those transactions. The Journal also reported that Xerox has been given the blessing by a major bank to receive lending for the transaction, should it go forward.
Last month, HP announced that it would cut between 7,000 and 9,000 jobs by 2022.
A marriage between the companies could make sense. Both Xerox and HP spun off their big money-making ventures in recent years, leaving behind aging printing businesses that remain profitable. But those earnings are dwindling every year.
Xerox started in 1906 as the Haloid Photographic Co. The photographic supply company in Rochester, New York, paved its way to mega-success in March 1960, when it shipped its first office copier.
HP traces its origins to 1938, when Bill Hewlett and Dave Packard rented a garage in Palo Alto, California. That year, they invented their first product: the HP Model 200A, an audio oscillator used to test sound equipment. The company became the pioneer of Silicon Valley, building its first computer in 1966 and the famous HP-35 in 1972 — the world’s first hand-held scientific calculator.