Xerox’s recent takeover bid of $33 billion from Xerox to its larger competitor HP was based on a announcement by the HP Board of Directors. The decision of the Board of Directors was unanimous. The reason given for the rejection of the takeover bid is that, following an examination by the finance and legal department, the bid is considered to be “significantly undervalued” and therefore not “in the best interests of HP’s shareholders”.
In addition to the amount of the purchase price, the takeover bid was also rejected because HP considers the “excessive debt on the combined company’s shares” resulting from the takeover to be too risky. HP also points out that Xerox’s market capitalization fell from $10.2 billion to $9.2 billion within one year, raising “significant questions about the development of your business and future prospects,” according to the Board.
Despite the current rejection of the offer, HP recognizes the “potential benefits of consolidation” and remains open to considering a new takeover offer with better terms. However, HP also requires a more detailed review, which can only be done if Xerox provides more detailed information (“access to diligence information”).