Xerox halts HP takeover bid as COVID-19 escalates
US-based printer-maker Xerox has temporarily suspended its bid to take over HP in the wake of global pandemic, coronavirus (COVID-19).
The company says in light of the escalating COVID-19 pandemic, Xerox needs to prioritise the health and safety of its employees, customers and partners over and above all other considerations, including its proposal to acquire HP.
John Visentin, Xerox vice-chairman and chief executive officer, says: “As we closely monitor reports from government and healthcare leaders across the globe and work with colleagues in the business community to minimise the spread and impact of the virus, we believe it is prudent to postpone releases of additional presentations, interviews with media and meetings with HP shareholders so we can focus our time and resources on protecting Xerox’s various stakeholders from the pandemic.”
For months, Xerox and HP have been playing a cat-and-mouse game, with Xerox aggressively pushing for a takeover, which the HP board has been reluctant to accept.
HP has rejected the bids three times.
The global IT company previously accused Xerox of overstating synergies. The HP board believes there is merit in industry consolidation; however, it says the tie-up must benefit its shareholders.
Xerox is not giving up as yet on its quest to take control of the multinational IT company.
Last week, it announced it is filing a preliminary proxy statement with the United States Securities and Exchange Commission in support of its slate of independent candidates to replace HP’s board of directors. Xerox has been threatening to replace HP's entire board, after it acquired a small stake in HP. The stake would give Xerox the right to nominate directors for elections to be held at HP’s annual meeting.
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 comes as HP is reportedly struggling to find a viable model to move beyond its profitable printing business as customers shift toward digitisation.
In October, HP posted its fiscal 2020 financial outlook and restructuring strategy, announcing plans to cut up to 9 000 jobs globally in the next three years.
The company estimates it will incur total labour and non-labour costs of approximately $1 billion in connection with the restructuring and other charges.