PC MAKER HP has "unanimously" rejected a takeover offer from Xerox, despite pressure from billionaire investor Carl Icahn.
The company said on Sunday that its board of directors had dismissed the offer, stating that Xerox's $33.5bn (£26bn) offer "significantly undervalued" HP and that a deal was not in the best interests of shareholders.
HP's chief executive Enrique Lores and chairman Chip Bergh said they were also concerned that the deal would leave the combined company with "outsized debt levels", though added that they 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," they wrote. "However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox."
HP's rejection comes just weeks after Xerox made an unsolicited, and unexpected offer for HP. The copier maker - which is valued at $8.5bn (£6.5bn) - said it believed the merger of the two firms would result in $2bn in cost savings over the next two years.
But Lores and Bergh questioned the merits of the proposal in their response, saying: "We note the decline of Xerox's revenue from $10.2bn to $9.2bn (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects."
"In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination," they added.
The unanimous dismissal of the offer also comes days after billionaire activist investor Carl Icahn, who holds a 10.6 per cent stake in Xerox and a 4.24 per cent stake in HP, pushed for a merger of the two companies.
"I think a combination is a no-brainer," Icahn told the WSJ, adding in that he strongly believes "in the synergies" the two companies would enjoy if they combined.
"There will probably be a choice between cash and stock and I would much rather have the stock, assuming there's a good management team," he added.
HP has surprised most analysts and investors by growing at a better-than-expected rate since its split with HP Enterprise (HPE) in 2015. However, in recent quarters, the company has struggled, particularly with its printer business which saw revenues tumble five per cent in Q3 2016, despite HP's 2016 acquisition of Samsung's printer business.
What's more, HP last month said that it would cut between 7,000 and 9,000 jobs by the end of 2022. The company believes the 'restructuring plan' will help make HP a "more digitally enabled company" and to save $1 billion by the end of 2022. µ
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