Xerox Decides Not To Take Over HP Due To 'Macroeconomic And Market Turmoil'

Xerox XRX will not go ahead with its $30 billion hostile takeover bid for HP Inc HPQ , due to the ongoing coronavirus pandemic.

What Happened

Citing “macroeconomic and market turmoil” caused by COVID-19, Xerox has ceased its efforts to place nominees on HP’s board.

Xerox stated, “While it is disappointing to take this step, we are prioritizing 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.”

Having received assistance from various banks in its bid to take over HP, Xerox thanked them for their unwavering commitment, even during the recent pandemic induced “market turmoil.” 

HP responded to Xerox’s withdrawal of the hostile takeover, saying, “We have a healthy cash position and balance sheet that enable us to navigate unanticipated challenges such as the global pandemic now before us, while preserving strategic optionality for the future.” The Palo Alto-based company said it would remain focussed on “addressing the needs of our ecosystem of stakeholders around the world.” 

Why It Matters 

HP is currently valued at $24.88 billion, while Xerox is worth $4.03 billion, according to Yahoo Finance. 

It was reported in November 2019, the Xerox was making a cash and stock offer to buy HP, a company that emerged after Hewlett-Packard was split in 2015. 

In October 2019, HP announced it would cut between 7000-9000 jobs and revised its outlook for 2020 by adjusting EPS to $2.22-$2.232 compared to the $2.24 estimate.

Price Action

Xerox shares traded 2.32% lower at $18.50 in the after-hours session on Tuesday. The shares had closed the regular session 5.52% higher at $18.94.

HP shares traded 1.90% lower at $17.03 in the after-hours session on Tuesday. The shares had closed the regular session 2.69% lower at $17.36.