Hardware firm HP has brushed aside an acquisition offer from printing specialist Xerox.
In a letter to Xerox VP and CEO John Visentin - posted on HP's investor relations page - the company revealed that its board of directors had "unanimously" rejected the proposal.
The offer saw Xerox offering $22 per share in a mix of 77 per cent cash and the remaining 23 per cent being given in stock. Alternatively, HP could go for $17 per stock and receive 0.137 per cent for each of its shares. HP's board of directors said that the deal undervalues the company.
"Our Board of Directors has reviewed and considered your unsolicited proposal dated November 5, 2019 at a meeting with our financial and legal advisors and has unanimously concluded that it significantly undervalues HP and is not in the best interests of HP shareholders. In reaching this determination, the Board also considered the highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock," the board wrote.
"We have great confidence in our strategy and our ability to execute to continue driving sustainable long-term value at HP. In addition, the Board and management team continue to take actions to enhance shareholder value including the deployment of our strong balance sheet for increased repurchases of our significantly undervalued stock and for value-creating M&A.
"We recognise the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox. 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. We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (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. With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction."
HP launched its Omen games brand back in 2014 and has since gone on to sponsor the Overwatch League and grow its market share. Speaking to PCGamesInsider.biz at Gamescom 2019, EMEA consumer personal systems lead Ricardo Silva said that the firm isn't worried about a platform like Google Stadia eroding the need for more casual players to buy a gaming PC. The company also rebranded recently to make it more approachable to a wider audience.
