U.S based printer manufacturer Xerox Holdings Corp (XRX) has confirmed abandoning its cash and stock $35 billion bid for PC and printing equipment maker HP Inc. (HPQ). The company made the announcement on this decision on Tuesday further adding rapid spreading of coronavirus across United States affected its decision.
In the beginning of March, Xerox said it will postpone meetings with HP shareholders to give coronavirus pandemic first priority thereafter resumes negotiation.
“While it is disappointing to take this step, we are prioritizing the health, safety and well-being of our employees, customers, partners and other stakeholders, and our broader response to the pandemic, over and above all other considerations,” said Xerox.
Another reason for suspending these meetings was due to the fact that HP assumed a poison pill position, which is a technique adapted by the target company with an aim of making the acquisition conditions hostile for the acquirer.
The poison pill tactic involves increasing acquisition costs, creating big incentives and allowing existing shareholders to purchase new shares at discounted prices.
In most cases this tactic is used to advocate for better rights for the shareholders or push the acquirer away which seems to have worked in this case.
In the Tuesday’s announcement Xerox acknowledged a potential acquisition with HP comes with long-term financial and strategic benefits. There’s a possibility of Xerox engaging HP once the pandemic is over however this can only happen in 2021 post its next annual general meeting.
On the other hand HP was thankful to all parties involved and stood by the company throughout the process.
“HP would like to thank our shareholders, partners, customers and employees for their input and continued support through this process,” said HP.