INSUBCONTINENT EXCLUSIVE:
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
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 Board of Directors,& the company said in a statement.
As for HP, it said it was strong financially and would continue to drive
shareholder value, regardless of the outcome:
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.
The bid never made a lot of sense
Xerox is a much smaller company, with a market cap of around $4 billion compared with HP with a market cap of almost $25 billion
It was truly a case of the canary trying to eat the cat.
Yet Xerox continued to insist today, even while admitting defeat, that it would
have been better to combine the two companies, something HP never felt was realistic
HP questioned the ability of Xerox to come up with such a large sum of money, and, if it did, would it be financially stable enough to pull
off a deal like this.
Xerox sweetens HP offer to $24 per share as take-over drama continues
Yet even as recently as last month, Xerox
increased the bid from $22 to $24 per share in an effort to entice shareholders to bite
It had previously threatened to bypass the board and go directly to shareholders before attempting to replace the board altogether.
HP
didn&t like the hostility inherent in the bid or any of the subsequent moves Xerox made to try to force a deal
Last month, HP offered its investors billions in give-backs in an effort to convince them to reject the Xerox bid
As it turned out, the drama simply fizzled out in the middle of a worldwide crisis.
HP offers its investors billions in shareholder returns
