Xerox Holdings Corp (NYSE:XRX) has withdrawn its tender offer to take over HP Inc (NYSE:HPQ) amid global economic uncertainty. The company began its efforts to acquire HP last fall and exchanged several angry letters. It even tried to acquire HP’s board, which rejected the acquisition bid.
The environment is not conducive to take over HP
The economic uncertainty created by the COVID-19 has shattered the dreams of XEROX. The company abandoned the takeover bid of the HP board. According to a communiqué from XEROX, the global health crisis and the resulting market turmoil and macroeconomic conditions are not favorable to acquire HP. Hence, XEROX decided to withdraw the bid to takeover HP. It will not nominate its highly qualified candidates to the director board of HP.
What HP says?
HP is financially strong to create value for the shareholders going forward. It maintains leadership in Print, Personal Systems, Digital Manufacturing, and 3D Print. The company is flush with cash to withstand any unanticipated challenges such as the COVID-19 pandemic.
XEROX is a small company. It has a market cap of $ billion when compared to HP’s market cap of $25 billion. Therefore, the bid to acquire HP doesn’t make sense. HP even questioned the capability of XEROX to raise such a large sum. Even recently, XEROX has increased the bid to $24 billion from $22 billion to entice the shareholders of HP. It also threatened to approach the shareholders directly bypassing the board in its attempt to grab HP. The company also tried to replace the board of HP.
HP is against the hostility attempts of XEROX to force a deal. The company last month offered billions of dollars to its investors to reject the takeover bid by XEROX. Anyhow, a worldwide crisis created by the COVID-19 pandemic turned down the deal between the two companies.
HP has posted revenues of $14.6 billion in Q1 2020. It is a drop of 0.6% when compared to the same period last year. Chief Executive Officer and President of HP, Enrique Lores said the results of Q1 2020 show that its business is getting stronger and stronger. It has a strong team to drive innovation and deliver value to the shareholders through disciplined cost management and execution.