HP board knocks back Xerox takeover bid

Printer company remains open to further talks after unsolicited offer from rival

HP’s board has unanimously rejected an unsolicited takeover bid from printer maker Xerox, claiming the offer undervalues the historic personal computer company.

Xerox had offered $22 (£17) per share, consisting of 77 per cent cash and 23 per cent Xerox stock, but HP has concluded that the deal is not in the best interest of shareholders.

In a letter to Xerox’s CEO John Visentin, HP’s board wrote: “In reaching this determination, the board also considered the highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock.”

The rejection comes despite pressure from billionaire investor Carl Icahn, who owns significant shares in both businesses. Icahn told the Wall Street Journal that combining the companies was a “no-brainer”, adding that both HP and Xerox were operating in shrinking but still potentially profitable markets.

While Xerox focuses on business printers, HP is bigger in the home printer and personal computer markets, creating what Icahn believes would be a balanced portfolio.

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The HP board did hold out the hope of the businesses working together in future, saying it recognised “the potential benefits” of consolidation.

“We are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox,” the note added.

HP is an offshoot of the original Hewlett-Packard company, formed in 1939 in Palo Alto, California.

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