Computer manufacturing giant HP has turned down a takeover bid of around $35 billion from Xerox Holdings Corporation on the basis that it had undervalued its business.

Last month, the US printer manufacturer offered an increased price of $24 per share, which was $2 per share more than the previous bid. However, it was rejected on the same basis by HP like all the prior offers from Xerox.

HP said that the latest cash-cum-stock offer from Xerox is not in the best interests of its shareholders and that its board has recommended unanimously that its shareholders decline it and not tender their shares pursuant to the takeover bid.

The personal computer manufacturer stated that the bid from Xerox meaningfully undervalues it by not reflecting the full value of its assets and also its independent strategic and financial value creation plan.

Furthermore, the offer has a considerable equity component, the value of which HP’s board thinks will be subject to substantial risks and uncertainties. HP also claimed that Xerox has been facing declining sales and the recent divestiture of its stake in the Fuji-Xerox joint venture raises significant questions about its future position.

Chip Bergh – Chair of HP Board of Directors said: “Our message to HP shareholders is clear: the Xerox offer undervalues HP and disproportionately benefits Xerox shareholders at the expense of HP shareholders.

“The Xerox offer would leave our shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and which would subsequently require unrealistic, unachievable synergies that would jeopardize the entire company.”

Xerox’s latest offer to HP is made up of $18.40 in cash and 0.149 of its shares for each of the latter’s shares.

John Visentin – vice chairman and CEO of Xerox said: “Our proposal offers progress over entrenchment.

“HP shareholders will receive $27 billion in immediate, upfront cash while retaining significant, long-term upside through equity ownership in a combined company with greater free cash flow to invest in growth and return to shareholders.”

  Chip Bergh, HP, John Visentin, USA, Xerox Holdings Corporation