Coronavirus Impact: Xerox Mothballs HP Offer

“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.

Xerox is hitting the pause button on its bid to acquire HP Inc.

Xerox CEO John Visentin said Friday that the company does not consider this week’s stock market decline, or the two tripped circuit breakers on March 10 and March 12, to be an obstacle to its proposed acquisition of HP. But the company said in light of preparations underway to protect its employees and business partners from the coronavirus pandemic, it would not be prudent to focus on the deal.

“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,” Visentin said in a statement. “As we closely monitor reports from government and healthcare leaders across the globe and work with colleagues in the business community to minimize the spread and impact of the virus, we believe it is prudent to postpone releases of additional presentations, interviews with media and meetings with HP shareholders so we can focus our time and resources on protecting Xerox’s various stakeholders from the pandemic.”

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Xerox, which is partially funding the $24-per-share takeover price for HP with shares in its own company, had its own stock price fall 14.15 percent to $23.90 on Thursday. That is a 37-percent tumble since Feb. 12, when shares closed at $38.19. The copier maker’s market cap lost $3.04 billion, falling from $8.12 billion a month ago to $5.08 billion at yesterday’s close.

Josh Justice, president of Just Tech in La Plata, Md. and a Xerox Accredited Master Elite Partner, praised the move, calling it the right play in these uncharted times.

“I think it is very important for Xerox and Xerox Partners to focus on the impact of the Coronavirus for the time being,” he said. “Changing our work methods, including moving in-person meetings to virtual WebEx meetings with clients and being considerate of clients concerns with regards to service calls with ensuring technicians are healthy and cautious, are two of the measures that JustTech has recently taken. We have had clients request that those entering their facilities fill out a health questionnaire, have their temperature taken and wear masks while at the clients’ location. Our technicians have been notified to abide by these requests and, of course, our team understands. Hopefully with all of the protective measures, the infections slow in coming weeks and we can get back to normal.”

Justice said, in a bit of good news, that Xerox channel partners got a letter this week from Xerox stating that its supply chain remains at normal levels.

However, as an example of the whipsaw pace at which business conditions are changing, just this last Tuesday Xerox reaffirmed its offer and called for a meeting of its own shareholders to approve the deal. That came after HP last week formally recommended that its shareholders ignore the $24-a-share tender offer from Xerox. HP's board of directors has repeatedly rejected the takeover deal since it was first proposed by Xerox in November.

HP's board believes that the Xerox offer "would compromise the future of HP and the value of shares of HP common stock by transferring value to Xerox shareholders and leaving HP shareholders with an investment in a combined company with an irresponsible capital structure, premised on unrealistic synergies estimates," HP said in a news release last week.