Xerox Holding Corp. suspended a hostile takeover attempt of rival HP, ten days following its blockbuster bid worth $35 billion. The reluctant pause to the acquisition efforts arrives in direct response to the increasingly threatening COVID-19 pandemic as the virus began rampantly spreading throughout the United States, prompting fears that the nation’s largest health crisis in modern history is on the horizon.
Xerox to resume HP pursuit once COVID-19 is under control
In a media statement made Friday morning, Xerox Vice Chairman and CEO, John Visentin, confirmed the printing empire is halting its unsolicited tender bid for the time being, asserting the health of both firm’s staffers, partners, and customers comes first. The industry veteran did not outright confirm Xerox will resume its pursuit of HP after the pandemic dies down. However, at least one credible source close to the company claims that’s precisely what Xerox is planning.
HP saw a third of its $31 billion market cap erased since receiving Xerox’s tender offer on March 2nd. Xerox experienced a similar fall-off over the same period as markets declined in inverse proportion to the outbreak’s snowballing reach. The current lack of market stability would have likely prompted federal regulators to freeze the deal even had Xerox decided not to put it on hold on its own.
As things stand right now, it’s highly unlikely the conglomerate’s attempt at a hostile takeover of HP resumes before late 2020 at the earliest. That’s assuming the tender offer is revisited at all seeing how HP has been rebuking Xerox’s unsolicited advancements since mid-2019 without much apparent effort, and that was before the planet found itself on the brink of one of the largest global crises since World War II. Plainly speaking, Xerox just cannot catch a break.
There’s no doubt public health concerns played a major role in halting the proxy investment war between Xerox and HP. Yet the financial havoc dovetailing with the pandemic arguably had just as massive of an impact on the latest episode in the 11-month takeover saga. Worth merely one-tenth of HP’s market capitalization, Xerox had a difficult enough task of being taken seriously by HP investors even before the stock markets came crashing this month. And while HP experienced a proportional drop, the highly diversified nature of its operations certainly makes it appear much better prepared for weathering this storm than its aggressive suitor.
Update, March 25th: With an HP tie-up looking increasingly less likely, Xerox nabbed a consolation prize in the form of unexpected acquisitions of ITEC Connect and Altodigital.
Update, March 27th: surely enough, HP went on record to describe the current crisis and related market fluctuations as fundamentally incompatible with any responsible M&A activity, concluding it will have none thereof for the time being.
Author: Dominik Bosnjak