Two main reasons: because they weren’t legitimate and regional power politics.

When Saddam Hussein declared that he’d leave Kuwait, he did so by saying it was conditional on the Israeli government withdrawing from Palestine and the Golan Heights. This was never going to be accepted by the Western Coalition governments, least of all the US government. From their perspective, if they allowed the Iraqi regime to extricate itself from its own conquest on their own conditions, then this would have made the US government look weak - essentially, that they couldn’t stand by their allies against the Iraqi regime.

Moreover, the offer wasn’t really meant to be taken but to rally support for the Iraqi regime across the Arab world. When the UN Security Council demanded that Saddam withdraw his forces from Kuwait, him turning around and essentially saying “I’ll do it when you hold Western governments to the same standard” was seen by many in the Middle East as an Arab leader standing up to Western imperialism. Made Saddam very popular indeed.

There’s also the fact that Saddam was viewed as a threat to the stability of the Middle East by Coalition governments. He had a large army, was willing to use it, and had stocks of WMDs. An unstable Middle East would mean unstable oil supplies and prices as well as an opening for Iranian regime to spread its influence across the region. The US government felt that Saddam’s ability to cause havoc to their interests in the Middle East had to be curtailed (which ended up with them destroying much of his army) but also keeping it intact enough to remain a threat to the Iranian government.

So, in short, the offers were rejected because they were propaganda ploys, would’ve made the US government look weak for accepting, and because the Coalition governments wanted to ensure that the Iraqi dictatorship remained a threat to the Iranian government, but not strong enough to threaten wider regional stability which would put their interests at risk.

Hope this helps!