Xerox Plans to Expand Slate of HP Board Nominees to 12

(Bloomberg) -- Xerox Holdings Corp. plans to expand its slate of nominees to replace the board of HP Inc. to 12 directors with the addition of former Alliant Energy Corp. Chief Executive Officer Erroll B. Davis Jr., according to people familiar with the matter.

His nomination is expected to come as early as Monday, said the people, asking not to be identified because the matter is private. Davis has served on the boards of several high-profile companies, including Union Pacific Corp., General Motors Co., PPG Industries Inc. and BP Plc.

Representatives for Xerox and HP declined to comment. HP had previously said it believed Xerox’s nominations are a “self-serving tactic by Xerox to advance its proposal, that significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders.”

The move comes as Xerox and HP executives are expected to meet this week to discuss HP’s ongoing concerns about the tie-up between the companies.

Davis’s nomination follows a decision by HP to temporarily expand its board to 13 members with the addition of NXP Semiconductors NV CEO Richard Clemmer last month. Former HP CEO Dion Weisler has already said he plans to step down as a director after the annual meeting, which will shrink the board size to 12 members at that time, HP said.

At the time of Clemmer’s appointment to the board on Feb. 27, HP said it would give 10 days to Xerox to nominate an additional director.

With the addition of Davis, Xerox continues to push to replace the entire board of HP in order to help facilitate a merger between the companies. Concurrently, Xerox officially launched a tender offer to acquire HP last week after the personal computer giant continued to rebuff its efforts for a tie-up.

Xerox is offering $24 a share in cash and stock -- or roughly $35 billion -- to acquire HP. The photocopying pioneer has said combining would yield $2 billion in cost savings and more than $1 billion in additional revenue growth. Activist investor Carl Icahn, who owns an 11% stake in Xerox and a 4.4% stake in HP, has also been advocating for a merger between the two companies.

HP’s board has rejected Xerox’s offer, arguing it undervalues the Palo Alto, California-based company. HP announced last month it will return $16 billion to shareholders as part of a standalone plan.

Xerox said in a regulatory filing that executives for both companies, including Xerox CEO John Visentin and HP CEO Enrique Lores, spoke by telephone on March 3. Lores said he would like to arrange an in-person meeting to have an an “in depth conversation” about the three concerns HP has about a tie-up, namely the value exchange, capital structure and synergies, Xerox said in the filing.

“Visentin responded that Xerox had already made an offer to combine the companies that Xerox believes HP stockholders support, and had no intention of deviating from the course and timeline of the offer, but added that Xerox would be willing to meet and listen if HP has an offer or proposal that it believes addresses their concerns and creates value for Xerox shareholders,” according to the filing.

Xerox said the parties planned to schedule a meeting for this week.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks, Elizabeth Fournier

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