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On Sunday, HP's board of directors unanimously rejected a proposal by Xerox to take over the company because the offer is not in the shareholders' interest and would underestimate HP.
Xerox had offered HP $ 22 per share in its takeover bid for the company. The bid consists of 77% cash and 23% stock, or $ 17 cash and 0.137 Xerox shares for each HP share.
"When the board reached this resolution, the board also considered the highly contingent and uncertain nature of the proposal, including the potential effect of excessive debt levels on the overall company's stock," the board wrote in a letter to John Visentin, CEO of Xerox.
HP announced in October that it would cut between 7,000 and 9,000 jobs by the end of fiscal 2022 as part of a broader restructuring plan that it estimates will save a billion dollars a year. The cuts would make up nearly 1
The software company is worth $ 29 billion and is over three times the size of Xerox, which makes printers and copiers, in terms of market capital.
"We note that the decline in Xerox revenue from $ 10.2 billion to $ 9.2 billion (on a 12-month basis) since June 2018, which raises significant questions for us about the path to your business and future prospects," wrote the board.
"In addition, we believe it is crucial to conduct a rigorous analysis of achievable synergies from a potential combination," the board wrote. "With significant commitment from Xerox management and access to information about Xerox, we believe we can quickly evaluate the benefits of a potential transaction."
HP was created after Hewlett-Packard separated its business – Hewlett Packard Enterprise – which sells data storage equipment and servers, among others.
Activist investor Carl Icahn, who owns a 10.6% stake in Xerox, recently bought a $ 1.2 billion stake in HP. He pushed for the merger of the two companies, believing that a combined company would benefit both shareholders, given the potential for cost savings and a balanced portfolio of printer options.