Xerox Pauses Campaign to Take Over HP as Coronavirus Pandemic Escalates
March 13 2020 - 11:16AM
Dow Jones News
By Dave Sebastian
Xerox Holdings Corp. said it is putting its campaign to take
over HP Inc. on hold, a sign that the coronavirus pandemic is
affecting deal making.
The company said Friday it is postponing additional
presentations, interviews with the press and meetings with HP
shareholders.
"In light of the escalating Covid-19 pandemic, Xerox needs to
prioritize health and safety of its employees, customers, partners
and affiliates over and above all considerations, including its
proposal to acquire HP, " Xerox Vice Chairman and Chief Executive
John Visentin said.
The company said it doesn't consider the market decline since it
put out its bid or the temporary suspensions of HP shares in recent
days as a result of marketwide circuit breakers as a failure of any
condition to acquire HP. Xerox said it would take the same view in
future trading halts.
HP last week rejected Xerox's $35 billion bid to take over the
company, saying a combination would disproportionately benefit
Xerox shareholders and that Xerox doesn't have the operational
experience in HP's sectors, such as personal systems, home printing
and 3-D and digital manufacturing.
A deal would combine household names that have been trying to
reorient their businesses. The two companies dominate different
areas of the printer market and have both been cutting costs as the
need for printed documents declines.
Xerox has argued that a combination could equip the companies to
overcome those declines, potentially yielding savings of more than
$2 billion. The proposed deal has the backing of activist investor
Carl Icahn, who has stakes in both companies.
Xerox primarily makes large printers and copy machines and
generates revenue from renting them to businesses and maintaining
the devices. HP mainly sells smaller printers and printing
supplies, and it is also one of the biggest PC makers in the world,
though its printer business is more lucrative.
HP in February said it would buy back $15 billion of its stock
as it worked to block Xerox from taking over. In January, Xerox
said it plans to nominate 11 independent candidates to replace HP's
board at HP's annual shareholder meeting this summer.
Shares of Xerox rose 3.4%, and HP shares rose 2.5%. HP, which
had a market value of about $25.83 billion, is significantly larger
than Xerox, whose market capitalization was about $5.28 billion.
Both companies' shares have fallen this year as equities plunged
into the bear market on coronavirus concerns.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
March 13, 2020 11:01 ET (15:01 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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