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What Would It Take to Get HP to Say Yes to a Merger with Xerox?

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HP (HPQ) - Get Free Report rejected a potential $32 billion takeover bid from Xerox Holding Co. (XRX) - Get Free Report while noting it was "open to exploring" a potential tie-up with its smaller rival.

HP said Xerox's offer of $22 a share, put to the board on November 5, "significantly undervalues" HP and is not in the best interests of shareholders, citing Xerox's high debt levels and business prospects. HP did, however, leave a window open for future negotiations if it was able to gain access to information on Xerox and engage with group management, wrote TheStreet's Martin Baccardax.

"We recognize the potential benefits of consolidation, and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox," HP said in a letter to the Xerox board that was subsequently emailed to TheStreet. "However, as we have previously shared in connection with our prior requests for diligence, we have fundamental questions that need to be addressed in our diligence of Xerox."

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