CHICAGO, Illinois (From The Wall Street Journal) -- Xerox Corp. privately rejected a bid to merge its document business with R.R. Donnelley & Sons Co., according to people familiar with the matter.

Xerox in January announced plans to break into two businesses, splitting its business-outsourcing operations from its legacy printer and copier division. As is often the case with such breakups, Xerox has drawn some interest in potential deals since then, people familiar with the matter said.

R.R. Donnelley, which is also in the process of breaking up, expressed interest in putting its operations together with Xerox's remaining copier business, the people said.

The proposal called for a deal that would have been structured as a so-called Morris Trust, a tax-efficient set-up in which Xerox would get a slight premium, one person said. The R.R. Donnelley proposal called for its executives to take control, and for several hundred million dollars in new cost cuts, the person added.

The Xerox board reviewed the proposal with its advisers before telling R.R. Donnelley Thursday it wasn't interested--believing its own plan is less risky, the people said.

Xerox, based in Norwalk, Conn., has been plowing ahead with its plans for separating the businesses by the end of the year, naming new chief executives for both in June. Insider Jeff Jacobson is being promoted to the leader of the slower-growing documents business, which will keep the Xerox name, and Ashok Vemuri was hired to be the CEO of the services business, to be named Conduent Inc. Current Chief Executive Ursula Burns will be chairman on the documents company.

Meanwhile, last month the company agreed to let activist investor Carl Icahn place a director on the board immediately, who would continue on the board of the split-off documents business. That is in addition to three seats Mr. Icahn has already been promised at the business-services company when that is spun out. Mr. Icahn owns a 9.8% stake, making him the largest Xerox holder.

Chicago-based R.R. Donnelley has said it would separate into a financial-communications and data-services business; a publishing and print-services business; and a communications-management company.