HP‘s board of directors has unanimously rejected Xerox‘s takeover bid, citing the “highly conditional and uncertain nature” of the proposal, but hasn’t closed the door on a potential deal.

Nearly two weeks ago, Xerox confirmed its offer to acquire HP in a deal valued at about $33.5 billion. Xerox had offered HP $22 per share in its takeover bid for the company. The bid consists of 77% cash and 23% stock, or $17 in cash and 0.137 Xerox for each HP share.

In a letter to John Visentin, Xerox’s vice chairman and CEO, HP said the offer “significantly undervalues HP and is not in the best interests of HP shareholders.” It also expressed concerns about the “potential impact of outsized debt levels on the combined company’s stock.”

“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,” it said. “However … we have fundamental questions that need to be addressed in our diligence of Xerox. We note the decline of Xerox’s revenue from $10.2 billion to $9.2 billion (on a trailing 12-month basis) since June 2018, which raises significant questions for us regarding the trajectory of your business and future prospects. In addition, we believe it is critical to engage in a rigorous analysis of the achievable synergies from a potential combination. With substantive engagement from Xerox management and access to diligence information on Xerox, we believe that we can quickly evaluate the merits of a potential transaction.”

HP said it has “great confidence in our strategy and our ability to execute to continue driving sustainable long-term value at HP.”

“In addition, the board and management team continue to take actions to enhance shareholder value including the deployment of our strong balance sheet for increased repurchases of our significantly undervalued stock and for value-creating M&A,” it said.

Xerox couldn’t be reached for comment. When confirming the takeover bid, Xerox said “our industry is long overdue for consolidation, and those who move first will have a distinct advantage.”

Amy DeCarlo, GlobalData’s principal analyst of security and data-center services, tells us this decision by HP‘s board is not unexpected.

“HP’s board didn’t like the offer, saying it undervalued the company,” she said. “The board also said the combined company would carry too much debt. However, the board seemed open to future – and better offers. Specifically, it said the board noted there are benefits to consolidation and it would entertain future offers.”