Coronavirus has killed the audacious Xerox-HP deal

April 1, 2020, 1:55 PM UTC

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Printing specialist Xerox has cancelled its hostile takeover bid for rival HP Inc., citing the coronavirus pandemic and ensuing market turmoil.

It marks the end to a bumpy multi-month saga, during which Xerox argued a combination would create cost savings in a declining print market—and HP countered repeatedly, arguing such a deal undervalued itself and would result in an overly risky merged company.

After all, Xerox, valued at $8 billion when its plans were first made public, had offered to finance a $34 billion cash-and-stock acquisition while in debt—about $24 billion of it. HP was valued at $31 billion. 

Though I say it’s the end … it’s more of an extreme turn in the story. The trends that sparked talks of a merger, namely the falling demand for print, will persist with or without coronavirus. And even as he rebuffed Xerox, HP CEO Enrique Lores told the Financial Times in early March that he was “constantly analyzing” potential M&A deals.

And with a global recession underway, HP looks to be in a somewhat better position than its smaller peer. HP’s market cap has fallen roughly a fifth to $25 billion amid the market rout. Xerox’s? By about a half, to $4 billion. And if that’s the case—then could coronavirus set a stage for HP to become the acquirer?

An HP acquisition could result in a company that is far less debt laden and significantly more cash rich.

Still, turning a tense relationship into a friendly one is no easy task.  

For an in-depth read on the takeover and its twists, read my colleague Shawn Tully’s feature here.

Tinder during coronavirus: In a bid to get information from the coronavirus centers, including censor-covered China, people are using Tinder.

“We heard from some users that they were Passporting into regions hardest hit by the pandemic to get insights about the on-the-ground situation first-hand, to listen, and to offer emotional support,” CEO Shar Dubey wrote in a letter.

While messaging volume has risen on the platform however, new user signups especially in coronavirus-hit areas have fallen. The group is predicting first quarter revenue to come in at the “low-end” of its previously predicted range.

Lucinda Shen
Twitter: @shenlucinda


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