Computer maker HP has rejected the $33.5 billion cash and stock bid by printer giant Xerox Holdings. HP added that the offer “significantly” undervalues the computer giant.
However, the company said that there are potential benefits from a merger between HP and Xerox. HP added that it is open to explore a takeover offer for Xerox.
Shares in HP fell about 5% on Monday. Xerox’s stock declined around 7% since media reported that it has offered to buy its rival.
Xerox’s market value is around $8.4 billion, while HP is valued at close to $30 billion.
The printer maker offered to pay $17.00 in cash and 0.137 Xerox shares per HP stock investors own. HP shareholders would have owned approximately 48% of the combined entity.
“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 CEO Enrique Lores and chairman Chip Bergh told Xerox in letter.
Activist investor Carl Icahn said that a merger between the two firms is a “no-brainer.” The billionaire owns 4.24% of HP’s shares and 10.6% stake in Xerox.
Icahn and fellow investor Darwin Deason took control over Xerox’s board in 2018. The investor did not set on a structure for a deal with HP, as long as a merger happens.
Last month, Xerox reported $2.2 billion in revenue in the third quarter. This in a decrease of 6.5 % compared to the same period last year.