Shares of HP (NYSE:HPQ) have plunged today, closing down 14%, after smaller rival Xerox (NYSE:XRX) abandoned its hostile takeover attempt. Yesterday evening, Xerox said it was formally withdrawing its tender offer to acquire all of HP's outstanding shares.
Ever since late 2019, Xerox has been trying to acquire HP. Initially, talks were cordial as Xerox negotiated with HP's board, but after multiple spurned offers, the company launched a hostile takeover in the form of a tender offer appealing directly to shareholders. Xerox's offer of $24 per share was the same price that HP's board had rejected. Last week, HP issued a letter to shareholders urging them to decline the offer, arguing that the combined company would have an unsustainable debt load and that the price undervalued HP's long-term prospects.
"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," Xerox said in a statement. "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."
"We remain firmly committed to driving value for HP shareholders. HP is a strong company with market leading positions across Personal Systems, Print, and 3D Printing & Digital Manufacturing," HP responded. "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."
Xerox added that HP's "refusal" to negotiate was "a great disservice to HP stockholders, who have shown tremendous support for the transaction." The tender offer, which consisted primarily of cash and would have been funded mostly with debt, was roughly 62% higher than where HP shares closed today.