On Sunday, hewlett-Packard again rejected Xerox’s $33.5 billion cash-plus-share offer, saying it “significantly undervalues HP.” “We reiterate that we reject Ede’s offer becaus e it significantly undervalues HP,” HP said in a letter to Xerox. ”
Xerox had previously offered to buy HP for $22 a share, but was immediately rebuffed by the latter, which said the company’s value was grossly undervalued and questioned Xerox’s future growth prospects. HP said the smaller acquirer had not proved it was in good health and that it might not be able to raise enough capital or complete such deals.
“Your proposal is not enough to form the basis of due diligence or negotiation,” wrote Eric Lores, HP’s chief executive, and Chip Bergh, chairman, in a letter to Xerox’s chief executive, John Visentin. ”
“In your aggressive rhetoric and actions, it is clear that Xerox intends to impose a potential merger on speculative terms without providing sufficient information,” the letter said. You are now openly calling for an accelerated deal, but you still don’t address the existing issues, which will only increase our concern scare for your business and prospects. ”
Xerox representatives declined to comment. The company said last week it would file a takeover offer directly to shareholders unless HP agreed to conduct “mutually proven due diligence” by 5pm local time on November 25. Xerox is likely to launch what it calls a “proxy war” to achieve acquisition targets by changing its board of directors.
HP said it had a number of options to create value for shareholders, including other mergers and share buybacks. “It is important to stress that we do not rely on a merger with Xerox,” Lores and Berger wrote. ”
However, Mr. Lores and Mr. Berger said HP was still willing to consider the potential value of the merger, but that it would depend on Whether Xerox was more proactive. Xerox’s sales in four of the past five quarters were lower than expected, and they expected the decline in revenue to continue, they said. HP is also concerned that the termination of the partnership between Xerox and Fuji Holdings could undermine its ability to sell in Asia.