Printer giant HP has rejected a takeover from smaller rival Xerox despite pressure from billionaire and activist investor Carl Icahn, who has a stake in both companies.
HP's board of directors on Sunday said they had unanimously rejected the "unsolicited" proposal from Xerox Holdings Corporation, claiming their offer of undervalued HP and was not in the interest of shareholders.
In an open letter to Xerox, HP’s chief executive, Enrique Lores, and chairman Chip Bergh aired concerns that the deal would leave the combined company with “outsized debt levels” but recognised “the potential benefits” of a merger, suggesting discussions may still be on the table.
“We are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox,” wrote Lores and Bergh. “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.”
It will mean disappointment for outspoken Icahn, who had been pushing the merger after buying a stake in both. The 83-year-old activist investor previously described a deal as a "no-brainer". He owns 10.6 The pc of Xerox and 4pc of HP.
Connecticut-based Xerox, which is worth about $8.3bn, was known to have been in talks to acquire the much larger HP that has a market cap of nearly $30bn for several months.