In a statement published today (5 March), HP’s board of directors said it has concluded that Xerox’s offer “is not in the best interests of HP shareholders” and has asked its shareholders to not tender their shares pursuant to the offer.

“Our message to HP shareholders is clear: the Xerox offer undervalues HP and disproportionately benefits Xerox shareholders at the expense of HP shareholders,” said HP chairman Chip Bergh.

“The Xerox offer would leave our shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and which would subsequently require unrealistic, unachievable synergies that would jeopardise the entire company.”

HP president and chief executive Enrique Lores said: "HP is a trusted brand with a strong track record of value creation and we’re executing a clear plan that will drive significant earnings growth.

“We’re well positioned in our categories, aggressively attacking costs and pursuing the most value creating path for our shareholders.”

HP said its board considered numerous factors in reaching its recommendation to shareholders.

It said the Xerox offer, in effect, “principally offers HP shareholders something they already own, and would disproportionately benefit Xerox shareholders relative to HP shareholders” and that it “would use HP’s balance sheet as transaction consideration for the benefit of Xerox shareholders”.

HP added the offer fails to reflect “the full value of HP’s assets and its standalone strategic and financial value creation plan” and that it “includes a significant equity component, the value of which the HP board believes would be subject to significant risks and uncertainties”.

Additionally, HP said Xerox’s recent sale of its interest in the Fuji-Xerox joint venture “raises significant concerns about its future position” and added it believes Xerox’s cost-cutting “has come at the expense of long-term value creation” and that Xerox “has demonstrated a lack of focus on research and development”.

HP's board also believes that Xerox’s “urgency” in launching the offer, while simultaneously running a full slate of director nominees for election at HP’s 2020 AGM, “evidences Xerox’s desperation to acquire HP to address its continued business decline”.

Xerox launched the tender offer for all of HP’s outstanding shares earlier this week. The offer, for $24 (£18.55) per share, is comprised of $18.40 in cash and 0.149 Xerox shares for each HP share and values HP at around $35bn.

The offer and withdrawal rights are set to expire on 21 April, unless the offer is extended.

Lores told the Financial Times today that HP “was evaluating other combinations”.

“There are other potential M&A [transactions] that we are constantly analysing. HP has a very global portfolio and M&A is a way to create value for our shareholders,” he said.

HP’s share price was down 0.97% to $21.39 at the time of writing while Xerox’s shares were down 5.08% at $31.98.