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Law360 (March 13, 2020, 10:43 AM EDT ) Xerox has decided to postpone its $34 billion pursuit of HP for the time being because of the ongoing coronavirus outbreak, saying Friday that prioritizing the health and safety of its employees, customers and other associates takes precedence over the hostile takeover effort.
The announcement underscores that the spread of the coronavirus 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 undervalue it, but for now, the back and forth will be on hold.
For the time being, Xerox Holdings Corp. will no longer do anything related to the proposed deal, including putting out presentations, doing interviews with media or holding meetings with HP Inc. shareholders so that the company can instead "focus our time and resources on protecting Xerox's various stakeholders from the pandemic," according to a statement.
"In light of the escalating COVID-19 pandemic, Xerox needs to prioritize the health and safety of its employees, customers, partners and affiliates over and above all other considerations, including its proposal to acquire HP," said John Visentin, vice chairman and CEO of Xerox.
Meanwhile, Connecticut-based Xerox said it doesn't believe the recent drops in the market, or the trading halts, will affect its offer for California-based HP, the most recent of which values the company at about $34 billion.
"Xerox will take the same view on any future temporary trading halts, unless otherwise stated in advance," the company said.
A spokesperson for HP told Law360 on Friday that the company "won't comment on Xerox's statement other than to say we remain focused on acting in the best interests of our communities."
"In these uncertain times our priority is to stay focused on our shareholders, partners, customers and employees," the spokesperson said.
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 that 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 HP did not immediately respond to a request for comment on Friday.
Xerox is represented by King & Spalding LLP, and Citi is acting as Xerox's financial adviser.
Xerox's independent directors are represented by Willkie Farr & Gallagher LLP. Moelis & Co. is acting as the directors' financial adviser.
HP is represented by Wachtell Lipton Rosen & Katz.
Goldman Sachs & Co. LLC and Guggenheim Securities LLC are serving as HP's financial advisers.
--Additional reporting by Elise Hansen, McCord Pagan and Chelsea Naso. Editing by Katherine Rautenberg.
Update: This story has been updated to include comment from HP.
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