Xerox announced Wednesday it will not go ahead with its $30 billion hostile takeover offer for HP. The rationale? "Macroeconomic and business uncertainty" triggered by the pandemic, which prompted Xerox to suspend its attempts to place candidates on the board of HP.
Last fall, the narrative segued into a volley of increasingly hostile letters between the two firms, and Xerox's confrontational acts, including an attempt to take over the HP board which had resisted its takeover overtures.
All that plummeted to the ground Wednesday as Xerox formally revealed that it was backing down in the midst of the virus crisis-related worldwide economic turmoil.
The termination of the hostile takeover effort came less than two months after last year's HP board of directors rejected a proposition for the printing and copying company by around 10 percent.
"The ongoing global health crisis and the resulting macroeconomic and market uncertainty caused by COVID-19 has created an environment not conducive to Xerox's continued pursuit of HP acquisition," Xerox said in a statement.
HP responded to Xerox's withdrawal from the hostile takeover, saying that they have a "strong cash position and balance sheet" that helps the company to tackle unexpected threats like the global pandemic.
HP also said they're "preserving strategic optionality for the future." The Palo Alto-based company said it will stay focused on meeting the needs of its stakeholder community across the world. Xerox is a much smaller business, with a market cap of about $4 billion compared to HP, with a market cap of about $25 billion.
Yet on Wednesday, although acknowledging defeat, Xerox continued to believe that merging the two companies would have been better, something HP has never thought was possible.
HP doubted Xerox's ability to make such a huge amount of money, because if it did, it would be financially secure enough to pull off such a deal.
HP didn't like the implicit animosity in the offer, or any of Xerox's subsequent attempts to try to force a contract. HP rolled out billions in give-backs to its creditors last month in an attempt to convince them to reject the Xerox proposal. As it turned out, the drama actually fizzled out in the midst of a crisis around the world.
HP is currently estimated at $24.88 billion while Xerox is estimated at $4.03 billion, Yahoo Finance reports.
In November 2019 it was announced that the Xerox made a cash and stock bid to acquire HP, a business that emerged after Hewlett-Packard was broken up in 2015.
HP announced it will let go between 7,000 to 9,000 employees in October last year, and revised its 2020 forecast by raising its earnings per share to $2.21 to $2.22 compared to the $2.23 estimate.
