Xerox has decided to withdraw its tender offer to acquire HP and drop its efforts to influence the target company’s board, citing the “turmoil” caused by Covid-19.
“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,” Xerox said in a statement.
“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.
“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,” the company said.
Despite dropping its immediate plan to snap up HP, Xerox indicated that it still believes there are compelling long-term financial and strategic benefits that can be gained from merging Xerox and HP, suggesting that HP shareholders would be short-changed in the absence of such a deal.
“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,” Xerox said in its statement.
The decision to drop the bid comes after months of tussling between the boards of both hardware vendors after it emerged in November last year that Xerox was considering a bid to acquire HP, a move which would have united the global leaders under one roof.
Activist investor Carl Icahn subsequently got involved, buying a US$1.2 billion stake in HP and pushing for the personal computer maker's merger with printer maker Xerox Corp, arguing that a union could yield big profits for investors.
After HP rejected Xerox’s $33 billion unsolicited bid, suggesting the offer “significantly" undervalued it, Xerox bumped up the value of the deal last month.
In an official tender offer, Xerox offered to acquire HP shares for approximately $35 billion, which was also once again rejected by the personal computer maker over claims the number "undervalued" it.