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The HP Board unanimously rejects Xerox's bid to acquire the company

Tony Avelar | Bloomberg | Getty Images

On Sunday, HP's board of directors unanimously rejected a proposal from Xerox to acquire the company, as the offer is not in the shareholders' best interest and would undervalue HP.

Xerox had offered HP $ 22 per share in its takeover for the company. The bid consists of 77% cash and 23% stock, or $ 17 in cash and 0.137 Xerox shares for each HP share.

"To reach this decision, the Board also determined the highly conditional and uncertain nature of the proposal, including the potential effect of oversized debt levels on the combined company's stock," the Board wrote in a letter to John Visentin, Xerox's CEO.

HP announced in October that it would cut between 7,000 and 9,000 jobs by the end of the 2022 budget as part of a broader restructuring plan that it estimates will save a billion dollars a year. The cuts would amount to nearly 1

6% of its 55,000 employees worldwide, according to data from FactSet.

The software company is worth $ 29 billion and is over three times the size of Xerox, which makes printers and copiers, in terms

"We note that Xerox revenue decreased from $ 10.2 billion to $ 9.2 billion ( after 12 months) since June 2018, which raises significant questions for us about the path for your company and prospects, "the board wrote.

"In addition, we believe it is crucial to do a thorough analysis of the possible synergies from a potential combination," the Board wrote. "With a 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 the company business – Hewlett Packard Enterprise – which, among other things, sells data storage equipment and servers.

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, because he believed that a combined company would be in the interests of both shareholders given the potential for cost savings and a balanced portfolio of printer options.

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