In a statement issued yesterday evening (31 March) Xerox said that the macroeconomic and market turmoil caused by Covid-19 had “created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc”.
It is withdrawing the tender offer made to HP shareholders and will also withdraw its slate of board director nominations that would have been put forward at HP’s upcoming AGM.
“While it is disappointing to take this step, we are prioritising the health, safety and well-being of our employees, customers, partners and other stakeholders, and our broader response to the pandemic, over and above all other considerations,” Xerox stated.
The manufacturer thanked its supporters and financial backers for their support during the process, but also took a last sideswipe at HP’s board, in a tone that has characterised the aggressive discourse around the proposed transaction.
“The refusal of HP’s Board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction,” the Xerox statement said.
Xerox had already postponed activity around its bid due to the pandemic. At the beginning of last month it launched a tender offer, for $24 (£18.74) per share, comprised of $18.40 in cash and 0.149 Xerox shares for each HP share, which valued HP at around $35bn.
In response to the withdrawal of Xerox’s hostile approach, HP issued a statement that said: “We remain firmly committed to driving value for HP shareholders. HP is a strong company with market leading positions across Personal Systems, Print, and 3D Printing & Digital Manufacturing. We have a healthy cash position and balance sheet that enable us to navigate unanticipated challenges such as the global pandemic now before us, while preserving strategic optionality for the future.
“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 and position the business for the opportunities ahead. HP would like to thank our shareholders, partners, customers and employees for their input and continued support through this process.”
Shares in Xerox were up 5.5% yesterday at $18.94 but slipped in after-market trading. HP shares fell 2.7% to $17.36.
Last week HP wrote to its shareholders stating that it was “not the right time” to engage in M&A activity due to the virus crisis.
The pandemic has caused stock markets around the world to slump, and the market capitalisation of both Xerox and HP had effectively halved by the third week of March as a result.
HP’s market cap was $24.82bn at the time of writing.
—————————————————————– HP Board Rejects Xerox Takeover Offer
November 18th 2019
HP Inc.’s board unanimously rejected Xerox Holdings Corp.’s unsolicited takeover proposal, saying the $22-a-share offer is too low. But HP did say it’s still open to discussing a merger. Bloomberg’s Liana Baker reports on "Bloomberg Markets."