HP said Xerox has completely missed the mark about addressing its key concern about the proposed buyout.
In a letter to Xerox vice chairman and CEO John Visentin, HP's board of directors wrote that Xerox's announcement on Monday of securing AU$24 million of binding financing and being confident it could dispel concerns of not being able to raise the necessary capital to fund the buyout proposal did not address HP's key concerns.
"Your letter dated January 6, 2020 regarding financing does not address the key issue -- that Xerox's proposal significantly undervalues HP -- and is not a basis for discussion," the letter said.
The letter said however, the company is still open to "pursuing the most value-creating opportunities" for HP shareholders.
"We reiterate that the HP board of directors' focus is on driving sustainable long-term value for HP shareholders," the letter said.
In November, Xerox offered to pay $22.00 per share for HP, consisting of 77% cash and 23% stock, or $17 in cash and 0.137 Xerox share for each HP share.
See also: Xerox CEO: Our journey from paper docs to printed electronics (TechRepublic)
HP's board unanimously rejected the bid, arguing that the offer significantly undervalued HP and was not in the best interests of its shareholders. As part of the deal, the board was considering a cash-and-stock offer that was above HP's market value of $27 billion.
Xerox then sent a letter to HP's board of directors, urging the company to reconsider its buyout offer or else it would take its case directly to HP's shareholders. HP then sent a rebuttal letter to Xerox saying that it isn't good enough financially to buy a much larger company. HP has a market value of $27 billion, about three times the size of Xerox.
Undeterred, Xerox began pitching the buyout to HP's shareholders, arguing that the increased cash flow of a combined HP-Xerox would help pare debt, increase capital returns to shareholders, and drive greater investment in innovation. Xerox also said HP has key market gaps in segments where Xerox is strong, such as Office A3 and managed services. The complementary portfolios would increase the total addressable market for both brands, Xerox said.
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