Xerox is suspending its hostile takeover attempt of HP, citing the coronavirus outbreak.
“In light of the escalating COVID-19 pandemic, Xerox needs to prioritize the health and safety of its employees, customers, partners and affiliates over and above all other considerations, including its proposal to acquire HP,” Xerox CEO John Visentin said in a statement on Friday.
Since November, Xerox has been trying to convince HP shareholders to support its bid to acquire the PC maker. As a result, the company has been producing investor presentations and conducting media interviews touting the benefits to the potential merger. But now Xerox plans on postponing those activities so the company can focus on its own shareholders.
The vendor released the statement a day after US stocks plummeted 10 percent, the biggest dive the market has seen since 1987. Xerox’s own stock has fallen about 35 percent in the past month. Nevertheless, the company insists it made today’s decision with no influence from the stock market’s sudden downturn.
Xerox is trying to buy HP on claims the deal will help both companies save $2 billion over the next 24 months. How the merger might benefit PC consumers is less clear, but Xerox says the cost savings could be pumped into R&D.
HP has resisted the buyout efforts. Earlier this month, Xerox raised its bid to buy the company from $33.5 billion to $35 billion, but HP rejected the offer, saying the valuation was too low. HP is also doubtful a merger would result in cost savings or other benefits to the PC maker. Xerox is a smaller company, generating only $9.8 billion in annual revenue compared to HP’s $58.5 billion in 2018.
“At HP, we’re creating value, not risk,” HP CEO Enrique Lores said last week. “HP is a trusted brand with a strong track record of value creation and we’re executing a clear plan that will drive significant earnings growth.”