HP Spends Rs 12800 Crore To Acquire This Audio/Video Device Maker: Is Hybrid Work Model The Main Reason?

• HP Inc stated that it is going to buy the audio and video devices company Poly for $1.7 billion in cash. 
• HP’s expectation is that this deal will position its shares for long-term growth. But, the shares fell by 1.4% in premarket trade. 
• HP is providing each share of Poly at $40. 

On Monday, HP Inc stated that the company is going to buy the audio and video devices maker Poly for $1.7 billion in cash as it is looking to profit from the hybrid mode of work which has been booming due to the pandemic which naturally is increasing the demand for electronic products.

The technology company’s expectation is that this deal will  position HP’s shares for long-term growth. However, the shares fell by 1.4% in premarket trade.

The deal’s valuation

The company has put forward each share of Poly at $40. Poly, which was previously known as Plantronics, represents a premium of about 53% of the stock’s last closing price. Including debt, the deal is appraised at $3.3 billion.

“The rise of the hybrid office creates a once-in-a-generation opportunity to redefine the way work gets done,” HP’s Chief Executive Officer Enrique Lores said.

Rise in hybrid mode of work during pandemic is the reason for this deal

With the global Covid-19 pandemic suddenly significantly increasing the need for hybrid mode of work, the market globally has seen several investment purchases. This includes the business software developer Salesforce.com’s $27.7-billion acquisition of the office messaging and collaboration app Slack Technologies Inc last year.

Poly’s shares increased by 49% in premarket trade. The company said it is going to be required to pay a fee of $66 million if the deal is terminated.

The transaction between the two entities is expected to be concluded by the end of this year.

Source-https://www.reuters.com/technology/hp-buy-poly-33-bln-deal-2022-03-28/