Xerox abandons hostile HP takeover
Xerox has dropped its unsolicited US$35bn bid to buy HP, citing the coronavirus as the reason for pulling the pin on the strongly opposed takeover.
The big red has been pursuing HP for four months, with the HP board resolutely opposed to the deal from the start. HP is five times the size of Xerox, with sales last year of US$58.8bn, while Xerox achieved sales of US$9.8bn.
Instigated by major Xerox shareholder and corporate raider Carl Icahn, the deal would have seen HP shareholders receive $24 per share, up from the initial $22, with $18.40 in cash and the rest in Xerox stock of 0.149 of a share.
However, the HP share price has plunged by 25 per cent in the current market crash, from $23.35 on February 25 to $17.36 today. The Xerox stock price has had an even more precipitous fall, losing a third of its value, it is down from $36.46 on 25 February to $23.96 today, meaning the $24 offer is now less than $23.
The rhetoric between the two sides has ramped up throughout the past four months, just last week HP said the proposed deal ”Could be disastrous for HP, its shareholders, and our entire ecosystem”. HP CEO Enrique Lores called the funding “irresponsible” and said if it went through, the deal would cause “financial distress” to HP.
For its part, Xerox slammed the HP board, its final parting shot saying their “continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction.”
The fate of the production print business side of the company if a deal had gone through was unclear. Typically, corporate raiders in highly leveraged deals sell off the profitable parts of the business as soon as they can.
The HP Graphic Solutions business, which develops well-known print industry solutions including Indigo, PageWide, Latex, Scitex, and DesignJet, represents about 8 per cent of the HP business.
The Xerox production print business, which includes Iridesse, iGen, Versant, and Nuvera, is about four per cent of the overall Xerox business.