Xerox announced today that it will drop HP's hostile takeover bid. The drama started last fall with a flood of increasingly upset letters between the two companies and Xerox confrontation, including attempts to take over the HP Board, which had refused its takeover contracts.
All of that fell to the ground at Xerox today officially announced that it is waning given the global economic uncertainty surrounding the COVID 19 pandemic. The company also stated that it dropped its offer to take over the board.
"The current global health crisis and the resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox to continue to acquire HP Inc. (NYSE: HPQ) (" HP ") follow. Accordingly, we are withdrawing our takeover bid to acquire HP and will no longer attempt to nominate our list of highly qualified candidates for HP's board of directors, ”the company said in a statement.
HP is financially strong and will continue to increase shareholder value regardless of the result.
“We remain committed to increasing the value for HP shareholders. HP is a strong company with leading positions in personal systems, printing, 3D printing and digital manufacturing. We have a healthy cash position and balance sheet that will enable us to face unexpected challenges like the global pandemic ahead, while preserving the strategic option for the future, ”the company said in a prepared statement.
The bid never made much sense. Xerox is a much smaller company with a market cap of around $ 4 billion compared to HP with a market cap of almost $ 25 billion. It was really a case where the canary tried to eat the cat.
Even so, Xerox still insisted that it would have been better to combine the two companies, although HP admitted defeat, which HP never believed was realistic. HP questioned Xerox's ability to make such a large amount of money, and if it were financially stable enough to make such a deal, it would.
Last month, Xerox increased the offer from $ 22 to $ 24 a share to get shareholders to bite. It had previously threatened to bypass the board and go directly to shareholders before attempting to replace the board as a whole.
HP did not like the hostility associated with the offer or the subsequent steps Xerox took to force a deal. Last month, HP offered investors returns of billions to convince them to reject the Xerox offer. As it turned out, the drama just ended in the middle of a global crisis.