Xerox Pauses Campaign to Take Over HP as Coronavirus Pandemic Escalates

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 [e-mail]

(END) Dow Jones Newswires

March 13, 2020 11:01 ET (15:01 GMT)

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