As per the report by the news agency last Thursday, HP has to provide its pricing and other allied data to the authorized ministry every 6 months. After this news spread, shares of HP have gained approx 1.6%, which had a notable run so far this year. In the year-to-date period, HP has surged 38.6% growth noticed by its industry.
According to the sources, China’s Ministry of Commerce gave its permission for the transaction to let the HP Inc. HPQ acquire Samsung Electronics’ printer business for $1.1 billion. However, the most awaited deal has certain conditions in order to limit the company from monopolizing the domestic laser printer market. Per Reuters, the Ministry of Commerce limits HP, the tech giant from purchasing even a marginal stake in any other A4 printer manufacturer across the country. The regulatory body also stopped the company to “not to take its printers to limit compatibility with third-parties or claim in media that its printers are less compatible with the other suppliers.
It must be considered that HP made this acquisition deal in last year September with a plan to turn around its printer business. With the Chinese Government supporting it, HP is supposed to close this deal in the 4th quarter of this calendar year. The acquisition is a great movie by this renowned tech giant, as it will directly boost HP’s printing business because Samsung’s printer business currently has 6500+ printing patents. In addition, the deal will bring together approximately 1300 engineers and researchers to help in development as well as manufacturing ofHP printers.
Today, HP is one of the two publicly-traded entities made after the split of Hewlett-Packard Company in November 2015. Apart from this, the split resulted into the making of a new company named Hewlett Packard Enterprise. The former, i.e. HP mainly focuses on personal computers, HP printing products as well as services. Considering the data from past several years, HP’s printing business has been going through sluggish demand and cut-throat competition in the market that has directly affected its market share and profit.
The fact to consider here is that the demand of printer has been reduced if compared to what it was 10 years ago. It has gone below to a certain mark since people now-a-days are choosing digital alternatives over printed material. They consider this medium more cost effective. Moreover, HP has been also losing market share to the two of its biggest Japanese rivals- Epson and Canon. Price competition is the prime reason behind this as Canon and Epson both have been able to slash prices due to a weak yen compared to the U.S dollar.
Thus, we believe that this acquisition deal will work in HP’s favor. The deal will not only beat HP’s major competitors but also help in controlling the prices. In addition, the acquisition will also give HP authority to Samsung’s partners and build p the former’s position various geographies.
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