I can’t help but draw parallels to H.G. Wells’ novel “The War of the Worlds” or the 1953 movie starring Gene Barry (Our older readers may remember him as TV’s Bat Masterson.) after The Wall Street Journal reported yesterday that Xerox was ending its tender offer of more than $30 million to acquire HP as well as its campaign to oust the HP board. If you read the book or saw the movie (I didn’t see the Steven Spielberg 2005 version starring Tom Cruise, but I assume it ended the same way.), after a Martian invasion, and with the Earth’s population reeling, the war ended with the Martians dying from Earth-borne bacteria. That pretty much sums up how the Xerox-HP hostile takeover story ended as well.
Xerox issued the following statement about its reasons for abandoning its takeover bid.
“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. 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.”
Xerox’s efforts to acquire HP had already been put on hold two weeks ago as the COVID-19 pandemic worsened.
Meanwhile, HP, Inc. also issued a statement following the Xerox’s announcement.
“We remain firmly committed to driving value for HP shareholders. We have a healthy cash position and balance sheet that enable us to navigate unanticipated challenges such as the global pandemic now before us, while preserving strategic optionality for the future.”
Bloomberg reported this morning that HP’s shares fell 1.5% in extended trading after closing at $17.36 on Tuesday while Xerox’s stock remained stable, ending at $18.94.
I was convinced this was going to happen. I might have been the only person at The Cannata Report of that opinion, but I thought Carl Icahn and his team were unflappable and unstoppable. I didn’t think it far fetched either that HP might turn the tables and acquire Xerox. Considering Icahn had a horse in both races, I wasn’t about to bet against him. In my opinion, some sort of merger was inevitable.
While this story has reached its conclusion, we anticipate the current crisis could accelerate future acquisitions or mergers across the office imaging industry once the pandemic subsides. That’s been the nature of the office imaging industry for decades even during less uncertain times.
Business As Unusual: Something to Consider in the COVID-19 Era
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