HP rejects Xerox's $35 billion hostile takeover bid

The takeover would disproportionately benefit Xerox shareholders, HP believes, and leave behind a company overburdened with debt

PC abd printer maker HP Inc has rejected Xerox ' s unsolicited $35bn takeover bid, saying it undervalued the company.

In a statement, Palo Alto, California-based company said that Xerox ' s offer "meaningfully undervalues HP and would disproportionately benefit Xerox shareholders relative to HP shareholders".

The company also argued that a combination would leave shareholders with a company that is already burdened with a high level of debt. It pointed out that Xerox lacks operational experience in HP ' s sectors, such as home printing, PCs, and digital and 3D manufacturing.

HP chairman Chip Bergh said that the merger would require "unrealistic, unachievable synergies that would jeopardize the entire company".

The PC maker also requested its shareholders to reject Xerox ' s tender offer launched on earlier this week. On Monday, Norwalk, Connecticut-based Xerox finally made a formal tender offer for HP, a company that is nearly five times that of Xerox itself.

Last month, it had increased its buyout offer to $24 per share, after being rejected twice by the PC maker.

Xerox said it was willing to pay HP shareholders $24 a share, valuing the company at more than $35bn. Under new offer, HP shareholders would receive $18.40 in cash and 0.149 Xerox shares for each HP share.

Xerox latest offer is set to expire on 21^st April 2020.

Earlier in January, Xerox announced to have secured $24 billion in binding financing commitments from Citi, Mizuho and Bank of America, backing its proposed takeover. Xerox claimed that the funding commitment should dispel HP's concerns that Xerox would not be able to raise the required capital for the takeover.

Last month, HP announced a three-year financial value creation plan to stave off Xerox takeover bid. The company said that it plans to return approximately $16 billion to shareholders over the next three years, equating to nearly 50 per cent of HP's current market capitalisation.

HP and Xerox, which rule different areas of the printer market, have been trying to cut costs for the past few years as the need for printed documents declines across the world.

HP is known for making personal computers, printers and printing supplies. Xerox, on the other hand, specialises in making large printers and copy machines that are typically rented to businesses. In the 1970, the company's Xerox Parc research centre developed many of the underlying concepts of modern computing - but the company failed to capitalise on them.