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HP Council unanimously rejects Xerox's bid to acquire the company

Tony Avelar | Bloomberg | Getty Images

The HP Board of Directors said on Sunday that they unanimously rejected Xerox's bid to acquire the company because the offer was not in the best interests of shareholders and would underestimate HP.

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

"In reaching this determination, the Council also took into account the conditional and uncertain nature of the proposal, including the potential impact of large debt volumes on the combined company shares," 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, which it says will save $ 1

billion annually. The redundancies will represent nearly 16% of 55,000 employees worldwide, according to FactSet data.

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 borders.

"We are seeing a decline in Xerox's revenue from $ 10.2 billion to $ 9.2 billion (over the 12-month period) from June 2018, which raises significant questions for us regarding the trajectory of your business and

In addition, we believe that it is crucial to engage in a rigorous analysis of achievable synergies of a potential combination, "the board writes." With significant commitment from Xerox management and access to information for Xerox testing, we believe we can quickly appreciate the merits but a potential transaction. "

HP was created after Hewlett-Packard separated its business enterprise – Hewlett Packard Enterprise – which sells storage equipment and servers, among other things.

Investor activist Carl Icahn, who owns a 10.6% stake in Xerox, recently bought a $ 1.2 billion stake in HP, pushing for a merger between the two companies as he believed the combined company would be in the best interest and interest. of both shareholder groups, given the potential for cost savings and a balanced portfolio of tions for printers.

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