Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our California newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (March 31, 2020, 7:44 PM EDT) -- Xerox said Tuesday it is withdrawing its already postponed $34 billion hostile takeover bid for HP Inc., citing the market unrest caused by the COVID-19 pandemic and concern for the health and safety of its employees and others.
In a statement, Connecticut-based Xerox said its response to the novel coronavirus outbreak and the well-being of its associates, partners and others takes priority, including over its offer and bid to nominate its own candidates to HP's board of directors. However, the technology company said it still believes there are long-term financial and strategic benefits from a tie-up, and complained at California-based HP's lack of consideration for a possible deal.
"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," Xerox said.
Xerox's stock price was pummeled in the month of March, which saw some of the largest single-day stock drops in the history of the New York Stock Exchange. On Tuesday, Xerox closed trading at $18.94 per share, down more than 43% since March 2 and taking off more than $3 billion from its market capitalization.
In response to Xerox's withdrawn bid, HP said in a separate statement that it remains committed to its shareholders and has a strong financial position to help it navigate issues such as the ongoing pandemic.
"Our focus remains on addressing the needs of our ecosystem of stakeholders around the world, ensuring that we build on our strength and resiliency throughout this crisis and position the business for the opportunities ahead," the company said.
On March 13, Xerox said it was postponing its unsolicited bid for HP due to the pandemic, which the World Health Organization on Tuesday said has now infected more than three quarters of a million people around the globe.
That earlier announcement underscored that in addition to the urgent threat to human life, the spread of the novel coronavirus also has major implications for the world of mergers and acquisitions.
Xerox has been attempting to acquire HP for months, and the companies have traded barbs, with HP saying Xerox's offers undervalued it.
The withdrawn offer could also moot a lawsuit against HP in Delaware state court from a shareholder over the company's disclosures before rejecting the takeover bid. Stockholder James R. Gould Jr. sued HP's directors on March 18, accusing the company of failing to provide adequate information about financial analyses said to support the rejection of Xerox's overall $24 per share cash-and-stock deal.
In October, HP announced plans to restructure its business, according to a statement from the time. In November, Xerox made a $22 per share offer that valued HP at about $33 billion, and after failing to come to an agreement with HP's board of directors, Xerox threatened to take its bid directly to shareholders.
In the months since, the two sides have gone back and forth. In January, Xerox unveiled plans to nominate a slate of 11 independent directors to HP's board, and in mid-February, Xerox upped its offer to roughly $34 billion.
On March 5, HP's board of directors rejected the latest bid and urged shareholders not to accept a tender offer launched by Xerox. According to HP, the offer "meaningfully undervalues" the company and disproportionately benefits Xerox shareholders.
A representative for Xerox did not immediately respond to a request for comment Tuesday.
Xerox is represented by King & Spalding LLP, and Citi served as Xerox's financial adviser.
Xerox's independent directors are represented by Willkie Farr & Gallagher LLP, and Moelis & Co. acted as the directors' financial adviser.
HP is represented by Wachtell Lipton Rosen & Katz, and Goldman Sachs & Co. LLC and Guggenheim Securities LLC served as HP's financial advisers.
--Additional reporting by Benjamin Horney, Elise Hansen, Jeff Montgomery, Rose Krebs and Chelsea Naso. Editing by Stephen Berg.
For a reprint of this article, please contact reprints@law360.com.
