HP Inc. has once again pushed back against efforts by Xerox Corp. to acquire it, as its board sent a letter Sunday bluntly telling Xerox it’s not interested.

The letter, addressed to John Visentin, vice chairman and chief executive officer of Xerox, a company most famous for its photocopiers, reiterated that HP rejects Xerox’s proposal as it significantly undervalues HP. The letter was a direct response to a letter written to HP’s board Nov. 21 by Visentin pledging to take the takeover offer to HP shareholders if a deal is not reached by Monday afternoon.

In the letter, the HP board said it has no confidence in Xerox’s management ability, citing declining revenue and missed opportunities.

Given the rejection, a potential proxy fight may ensue that could end with Xerox succeeding despite the HP board not supporting the takeover. Xerox first made its offer for HP on Nov. 6, offering $33.5 billion, a premium on HP’s market value, which was $29.6 billion as of the close of trading on Friday. Xerox argues that the combination of the two companies would create a bigger organization that could be more competitive in a stagnating printing market.

HP first rejected the Xerox offer Nov. 17, the company’s board saying that it had “unanimously concluded that it significantly undervalues HP and is not in the best interests of HP shareholders.” The letter also cited the “highly conditional and uncertain nature of the proposal, including the potential impact of outsized debt levels on the combined company’s stock.”

Although HP’s board may be dead-set against the acquisition, at least the current offer, shareholders in both companies are fond of the idea. HP along with Xerox stock rose when the proposed deal first became public and notably for HP, its share price continues to track higher than it has for four months since Xerox’s unsolicited offer.

Presuming that Xerox will now launch a hostile takeover, the question is whether it can win. Usually, the result of a hostile takeover is clear-cut coming into it, but not in this case. Given the premium on the table, HP shareholders may be tempted by the offer. But it’s not a huge premium either, and with the HP board opposed, it will come down to whom shareholders believe can deliver the best value on their investments.

Photo: Wikipedia