HP logo. Picture: 123RF/CLAUDIODIVIZIA
HP logo. Picture: 123RF/CLAUDIODIVIZIA

London — HP says it has rejected an unsolicited takeover offer from Xerox and has asked shareholders not to tender their shares.

The offer “meaningfully undervalues HP and disproportionately benefits Xerox shareholders,” the company said in a statement on Thursday. Xerox’s “urgency” in launching the offer shows its “desperation to acquire HP to address its continued business decline.”

On Monday, Xerox pitched HP investors on a cash-and-stock offer valued at about $24 a share at the time. For each HP share, a holder would receive $18.40 in cash and 0.149 Xerox shares. The offer is set to expire on April 21, Xerox said on Monday in a statement. The offer valued HP at about $34bn as of Wednesday.

HP shares were down about 1% at 9.52am in New York on Thursday to $21.37. Xerox fell 4.7%.

Xerox, which is much smaller than HP with a market value of about $7bn, had already raised its bid from a cash-and-stock offer of about $22 per share in November. The deal is fuelled with financing from Citigroup, Mizuho Financial Group, Bank of America, Mitsubishi UFJ Financial Group, PNC Bank, Credit Agricole, Truist Financial and SunTrust Robinson Humphrey for the cash portion.

A spokesperson for Xerox declined to comment on HP’s rejection.

HP, which has a large printing business, has said in the past that it has many routes to create value that aren’t dependent on a combination with Xerox. CEO Enrique Lores is still new to HP’s top job, and has sought to make his mark on a company he’s worked at for more than three decades.

Lores wants to make printing services, 3D printing and high-end computers a larger part of HP’s business, and would oversee as much as a 16% reduction in the company’s workforce in a bid to cut costs. The company has been frugal since splitting with server maker Hewlett Packard Enterprise in 2015, avoiding big mergers and acquisitions and returning capital to shareholders.

Xerox CEO John Visentin has criticised this plan as a piecemeal approach that would not be as beneficial to HP as a combination.

Xerox already had started a proxy fight, nominating 11 candidates for HP’s board to help close the deal. The two hardware giants have withered in a world increasingly driven by software, with less demand for printed documents. Xerox has argued the tie-up would revive both companies and unlock about $2bn in synergies.