Xerox drops $30B bid to takeover HP amid coronavirus crisis

Xerox Holdings Corp. will officially end its bid takeover to acquire HP Inc., as the coronavirus outbreak continues. Yahoo Finance’s Dan Howley shares the latest developments.

Video Transcript

JULIE HYMAN: Xerox's quest to acquire HP, which had been a back and forth situation for some months, now is not happening. Dan Howley has been watching that developing story for us. And they said it was because of coronavirus that they can't pursue this any longer.

DAN HOWLEY: Yeah, they're saying that basically the market doesn't allow for them to now go forward with this deal that Xerox was trying to put together and take over HP, a much larger company. HP was trying to reject this flat out for a while.

It came out in November that they were trying to get the company to agree to the terms for a $22 a share Xerox would pay for HP. Then they raised that to $24 a share. HP still said that it was undervaluing the company.

And then HP said that the amount of debt that Xerox had would have immediately impacted what would have been the combined company, hurting it in the long run and hamstringing its ability to put out new products, basically saying, look, this is a company that wants to take us over that doesn't have the financial standing to do so. And it would put us in a precarious position if we had agreed to these terms. So they were really backing off-- trying to push back on that.

Carl Icahn, by the way, had-- or has a stake in both companies and was trying to push this move forward. Xerox was seeking seats on the board to get a hold of the company entirely, but obviously, that's not going to happen now. And you know, it made sense to a degree as far as the printing services go between Xerox and HP when you just say they offer printers.

But in reality, you know, HP has its business side for printers, as well as its consumer side. Xerox has mostly just business side, and then, oh yeah, HP is one of the largest PC makers in the world, something Xerox has nothing to do with. So it would have been a very strange coupling of these two companies.

JULIE HYMAN: And I should mention the stock reaction's pretty acute. We're seeing HP down almost 10% today. Xerox shares down about 6%, not surprising. So as we go through this, within technology specifically, are there any other pending acquisitions that you're watching that may be similarly jeopardized? I can't think of anything huge that were waiting to close. I think the Sprint, T-Mobile deal just closed, but I don't know what else is out there.

DAN HOWLEY: Yeah, there's nothing huge at the moment or as big as this would be. But yes, Sprint and T-Mobile just closed today. John Legere saying that he's going to step down as CEO of T-Mobile, which is what the new company will be called. It'll be the third largest carrier in the US.

But they still have to shake out what happens with Dish, which is supposed to replace Sprint as a fourth carrier. Now Dish doesn't have any experience in running a wireless network. It's supposed to pick up where Sprint left off, which had a huge amount of experience as being a wireless carrier. And then that-- the idea here is that it leaves consumers potentially in the lurch.

Now T-Mobile had said and Sprint said they won't raise rates for some time, a set period of time. But once that's up, all bets are off. And it's up to consumers to see what ends up coming of the pricing for their various deals.

But it could be a huge blow to consumers. T-Mobile really pushed the industry forward, saying, we're not going to force you to use two-year contracts. That's why we don't have those anymore, allowing, again, back unlimited data and things of that nature. So it could be a serious blow to consumers in the long run.