HP adopts poison pill after Xerox's buyout attempts

(Reuters) - HP Inc <HPQ.N> said on Thursday it would implement a poison pill plan, a move that comes after Xerox Holdings Corp <XRX.N> pushed ahead with its efforts to acquire the PC maker.

Xerox recently raised its offer earlier this month by $2 to $24 per share, following several rejections of its previous buyout offers by the PC maker. HP shares closed up 0.9% at $22.64 on Thursday and were flat in extended trading.

The implementation of the stockholder rights plan, which has a one-year expiration period, aims to stop investors from amassing more than 20% stake in the company.

Among other terms, if any group acquires 20%, all shareholders outside the group will be able to buy additional discounted shares, diluting the ownership of the group.

"The rights will not prevent a combination of HP with another business, but should encourage Xerox (or anyone else seeking to acquire the Company) to negotiate with the Board prior to attempting to impose some combination that is not in the best interests of the HP shareholders," HP said in its statement.

Xerox did not immediately respond to a Reuters request for comment.

"The value of a year-long poison pill is to buy HP time to explore other offers," said Gene Munster, managing partner at Loup Ventures.

"That said, HP is delaying the inevitable given Xerox is their best option."

Some Wall Street analysts have said a merger would help the companies in a declining printing market, while others have cited challenges to integration, given their different offerings and pricing models.

The U.S. printer maker first made a $33.5 billion (£26 billion) cash-and-stock offer for HP, a company more than three times its size, in November. HP's board rejected the offer, saying it significantly undervalued the company, with Xerox then threatening to take its bid hostile.

Xerox said last month that it planned to nominate 11 independent candidates to HP's board and that it had secured $24 billion in financing for the offer.

In December, activist investor Carl Icahn, who has a 4.2% stake in HP and a 10.9% stake in Xerox, urged HP shareholders who had agreed to the merger to reach out to the PC maker's directors for immediate action.

(Reporting by Neha Malara in Bengaluru; Editing by Krishna Chandra Eluri)