Xerox's $30 billion takeover bid for HP has fallen flat, with the company's board unanimously rejecting the proposed deal.
On 7 November it was confirmed that the printer and copier maker was attempting to buy HP, despite the fact it's over three times Xerox's size.
In a letter to Xerox, HP's board of directors said it had "reviewed and considered" the takeover proposal, but found 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 letter added.
The board also cited Xerox's falling revenue, which fell from $10.2 billion (£7.9 billion) in June 2018 to $9.2 billion (£7.1 billion) in June 2019, as a reason for declining the deal. HP itself is currently valued at $27 billion (£20.8 billion).
The decision is unlikely to come as a surprise to market watchers. HP's initial response stated it had "great confidence in [its] multi-year strategy and... ability to position the company for continued success in an evolving industry", a stance it reiterated in its rejection letter to Xerox.
This isn't necessarily the end of the story, though. HP has said it remains "open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox". It's unlikely this would take the form of another Xerox bid for HP given the larger company's misgivings about shareholder value and debt, but could be a merger between the two or even HP acquiring Xerox.
"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's board said.
"We remain ready to engage with you to better understand your business and any value to be created from a combination."
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Jane McCallion is ITPro's deputy editor, specializing in cloud computing, cyber security, data centers and enterprise IT infrastructure. Before becoming Deputy Editor, she held the role of Features Editor, managing a pool of freelance and internal writers, while continuing to specialise in enterprise IT infrastructure, and business strategy.
Prior to joining ITPro, Jane was a freelance business journalist writing as both Jane McCallion and Jane Bordenave for titles such as European CEO, World Finance, and Business Excellence Magazine.