US-based printer maker Xerox has withdrawn its bid to take over HP, citing market turmoil caused by the deadly COVID-19 virus as the reason.
The company says the current global health crisis and resulting macro-economic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP.
“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,” says Xerox in a statement.
“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.”
Notwithstanding the offer withdrawal, Xerox says there is still compelling long-term financial and strategic benefits from combining with HP.
“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,” says Xerox.
The company initially halted its takeover bid in mid-March as COVID-19 escalated.
The latest development puts an end to months of a cat-and-mouse game, which saw Xerox aggressively push for a takeover, but the HP board had been reluctant to accept.
HP has rejected the bids three times.
The global IT firm previously accused Xerox of overstating synergies.
The HP board believed there was merit in industry consolidation; however, the tie-up must benefit its shareholders.
Since the beginning of the year, Xerox has been playing a high stakes game, threatening to replace HP's entire board, upping the stakes in its bid to control the company.
Xerox had initially offered HP $22 per share. The bid consisted of 77% in cash and 23% stock, or $17 in cash and 0.137 Xerox share for each HP share.
The tussle between the companies came as HP was reportedly struggling to find a viable model to move beyond its profitable printing business as customers shift toward digitisation.
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