The Strategist

HP turns down Xerox offer

11/18/2019 - 09:12

Board of directors of the computer and printer manufacturer HP has rejected the purchase offer of its competitor Xerox. HP's press release reads that the deal was estimated at about $33.5b ln. HP believes that it was "significantly underestimated", and the merger "does not meet the interests of shareholders" of the company.

"In making this decision, the board of directors also took into account the very conditional and uncertain nature of the offer, including the potential impact of over-indebtedness (of Xerox) on the shares of the merged company," reads the letter sent by HP to Xerox CEO John Visentin.

HP also expressed concern about the decline in profitability of Xerox in annual terms. "We are aware of the potential benefits of the merger and are open to exploring whether it is of value to HP's shareholders," HP added.

The market value of HP is about $27 billion, almost three times the value of its competitor. Xerox plans to buy HP were previously reported by The Wall Street Journal (WSJ). Xerox wanted to pay part of the deal in cash and part in its own shares. According to WSJ sources, Xerox received a notification from one of the major banks that it was ready to provide a loan for the deal with HP.