No mega acquisitions for HP Inc

HP Inc CEO Dion Weisler has said not to expect his company to be involved in $10 billion-plus acquisition deals for the foreseeable future.


Interviewed at a recent AllianceBernstein Strategic Decisions Conference in New York, HP Inc CEO Dion Weisler said he expected to see continued merging in the print space, but that HP wouldn’t “surprise the market” by jumping in and making an acquisition in excess of $10 billion. That would appear to rule out a move for Xerox following its failed merger attempt with Fuji — according to investor Carl Icahn, Xerox has been valued in the region of $15 billion.

With more than ten major players in the flat and mature laser print segment, Weisler commented that he expected consolidation to occur both organically and inorganically. This might not be unlike what happened in the PC market when the likes of Samsung, Toshiba and Sony exited the space altogether.

Strategy for growth

Weisler did concede that M&A activity remains a key component of HP’s growth strategy, but added that it wouldn’t be a question of buying market share just for the sake of it. He pointed to last year’s acquisition of the Samsung print business (known as S Print) as a technology and strategic move into the $55 billion A3 category.

Samsung also has a sizeable presence in the A4 market, and HP’s acquisition was seen at the time as a possible competitive move against long-time partner Canon. Weisler, though, said he had just returned from meeting with Canon’s leadership in Japan and that the 35-year joint venture relationship between the two firms had “never been stronger”. Even though HP probably now has the technology to go it alone in the A4 category, Weisler pointed out it did not make commercial sense to do so and that the relationship with Canon would continue.

The two companies will also “aggressively” defend their intellectual property, commented Weisler, in response to a question about China-made clones. He said he did not have a problem with legal aftermarket products, but added that it was “disturbing” when customers are tricked into purchasing what they believed to be genuine HP supplies.

Dealing with decline

AllianceBernstein research analyst Toni Sacconaghi provided some interesting anecdotal evidence about how companies are cutting down on their print output. He spoke about a company initiative called AB Paperless where employees are given $400 if they swap their desktop printer for an iPad. This is being done in order to reduce the perceived environmental impact of consuming paper as well as trying to reduce the $2 million a year the company spends in toner outside of its managed print programme.

Weisler responded by saying that HP doesn’t have its head in the sand regarding the future of printing and especially with home-based printing. However, he pointed to the “incredible success” of products such as the Sprocket mini wireless printer which is driving demand for print among younger consumers, and to HP’s strategic roadmap which will consider megatrends to fuel print demand.

In the commercial space — which Weisler described as flat — HP has a runway for growth in the A3 category as it integrates the S Print business. The target is to achieve market share of 12% — around $6 billion in annual sales — by the end of the 2020 financial year.