Xerox Drops Bid for HP

Xerox has pulled its hostile takeover bid for peer HP because of the general business uncertainty created by the coronavirus outbreak.

Ron Miller reported the news for TechCrunch:

Xerox announced today that it would be dropping its hostile takeover bid of HP. The drama began last fall with a flurry of increasingly angry letters between the two companies, and confrontational actions from Xerox, including an attempt to take over the HP board that had rejected its takeover overtures.

All that came crashing to the ground today when Xerox  officially announced it was backing down amid worldwide economic uncertainty related to the COVID-19 pandemic. The company also indicated it was dropping its bid to take over the board.

“The current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc. (NYSE: HPQ) (‘HP’). Accordingly, we are withdrawing our tender offer to acquire HP and will no longer seek to nominate our slate of highly qualified candidates to HP’s Board of Directors,” the company said in a statement.

CNBC’s Kif Leswing wrote:

Xerox had previously led a hostile takeover bid of HP which would combine the two legendary tech giants. HP had rejected Xerox’s proposals. In February, Xerox raised its offer to $24 per share, which would value HP at about $34 billion.

However, since Xerox sweetened its bid, the COVID-19 coronavirus outbreak spread around the world and has created economic uncertainty, which led to Xerox ceasing its pursuit of the transaction. HP is a larger company and is more highly valued than Xerox. 

HP announced last year that it planned to cut between 7,000 and 9,000 jobs by the end of 2022 to save $1 billion per year. In February, Xerox said that it had met with HP’s shareholders to discuss the potential “synergies” from a combination. In its statement about dropping its bid, Xerox said that HP used “delay tactics” while negotiating. 

Bryan Alexander from USA Today reported:

The hot-blooded corporate speak flew last week. In a letter to HP on Thursday, Xerox’s Vice Chairman and CEO John Visentin said the board “is determined to expeditiously pursue our proposed acquisition of HP to completion – we see no cause for further delay.”

HP shot back Sunday rejecting the bid a second time, saying that it would “not consider combining with Xerox” until the copy-making giant answered questions about how it planned to raise the cash portion of a potential deal.

“We are not dependent on a Xerox combination,” HP said. “We were in private discussions with you in August and September, we repeatedly raised our questions, you failed to address them and instead walked away, choosing to pursue a hostile approach,” HP said. 

HP responded to the news of the Xerox withdrawal Tuesday, stating in a release,  “Our focus remains on addressing the needs of our ecosystem of stakeholders around the world, ensuring that we build on our strength and resiliency throughout this crisis.”