HP rejects Xerox's $33.5 billion takeover proposal

Not long ago, a "snake swallowing an elephant" merger and acquisition event occurred in the United States. Xerox, a veteran technology company and printer and copier manufacturer, proposed to acquire the personal computer and printer giant HP for US$33 billion.

HP said on Sunday it was open to pursuing a takeover proposal for U.S. printer maker Xerox after rejecting a $33.5 billion cash-and-stock offer from the U.S. printer maker as "significantly" undervaluing the company.

HP's board said: "Since June 2018, Xerox's revenue has fallen from $10.2 billion to $9.2 billion (on a 12-month basis), which raises concerns about the company's business and prospects."

In addition, HP also said, "We should conduct a rigorous analysis of the synergies that can be achieved by a potential merger of companies. After a detailed understanding and due diligence of Xerox management, we will quickly evaluate a reasonable transaction price."

HP announced in October that it would lay off 7,000 to 9,000 employees by the end of fiscal 2022 as part of a broader restructuring plan to save $1 billion a year. According to data from professional agency FactSet, HP's layoffs will account for nearly 16% of its 55,000 employees worldwide. The old technology company currently has a market value of $29 billion, more than three times that of Xerox, which produces printers and copiers.

The move puts Xerox under pressure to open its books to HP. Xerox did not immediately respond to a request for comment on Sunday on whether it had entered into talks with HP and moved from being an acquirer to a potential target.

However, some analysts pointed out that if the acquisition was completed, Xerox would likely incur debts of at least $20 billion. For this reason, HP's board of directors also said, "One of the important reasons for rejecting the acquisition proposal is that there are still various uncertainties in the proposal, including the potential impact of excessive debt on the merged company."