Xerox, the global print and digital document corporation, has ended its hostile takeover bid for competitor HP inc, citing concerns regarding the current financial markets affected by the ongoing global coronavirus crisis.
In a statement issued on Tuesday, the company explained: “The current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc. (HPQ) (“HP”).”
“Accordingly, we are withdrawing our tender offer to acquire HP and will no longer seek to nominate our slate of highly qualified candidates to HP’s Board of Directors.”
Earlier this month, the Connecticut-headquartered firm revealed it was pausing its bid to acquire HP, explaining the need to prioritize the health of its employees, customers, partners, and affiliates in the wake of the COVID-19 pandemic. Now having withdrawn its tender offer of more than $30bn to HP shareholders in response to the escalating health and financial crisis, the move serves to both protect its employees as well as the safety of Xerox itself.
Two printing giants step up to 3D printing
With the paper printing (aka 2D printing) market in decline, various printer manufacturers have turned to 3D printing to retain business, including both Xerox and HP. The latter has established a presence within the 3D printing industry with home-brewed technology. Specifically the Multi Jet Fusion (MJF) 3D printing technology. Its most recent MJF release was the 5200 series 3D printers targeting volume production.
Xerox entered the AM sector initially as a reseller, then by acquisition buying liquid metal jet 3D printer manufacturer Vader Systems in February 2019. In the previous year the Xerox CEO also announced the intentions of the firm in the 3D printing industry, stating that Xerox was “developing a roadmap to participate in 3D printing.” Additionally, Xerox had a notable presence at Formnext 2019, making its debut at the major 3D printing event. It showcased the development of polymer powders for SLS 3D printers, a high-speed FDM system named Multi Nozzle Extrusion, and a Liquid Metal 3D printing system alongside AI software.
Significantly, HP has also been developing its Metal Jet 3D printing technology, based upon metal injection molding (MIM) powders, seeking to make the technology available to a wider user base in 2021. Had the merger gone ahead, it would have been interesting to see how these two paper printing giants could have combined their expertise for the metal additive manufacturing market.
Back-and-forth between HP and Xerox
Initially, Xerox made a $33.5bn bid to acquire HP in November 2019 which was rejected, resulting in a proxy fight to replace the HP board for a hostile takeover in January 2020. HP responded in kind, describing Xerox’s board nominations as “a self-serving tactic by Xerox to advance its proposal, which significantly undervalues HP and creates meaningful risk to the detriment of HP shareholders”.
HP CEO Enrique Lores and chairman Chip Bergh issued an open letter to shareholders last week arguing against Xerox’s proposal, explaining that it would create a level of debt for HP that the company could not support, especially in the context of the coronavirus pandemic and financial crisis. “Since Xerox launched its unsolicited exchange offer and nominated directors, the global social, economic and financial environments have changed radically,” wrote Lores and Bergh. “Despite this, Xerox continues to advance its tender offer and its proposed slate of directors in an effort to force a combination.”
In its recent statement, Xerox explained that it was disappointed to have to pull the plug in its pursuit to acquire HP, and maintains that a deal would be mutually beneficial in the long-term. It thanked the Xerox and HP stockholders, while criticizing the actions of the HP board: “The refusal of HP’s Board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction.”
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Featured image shows a paper jam in Xerox’s bid to takeover HP.