Xerox, a provider of software and hardware solutions for various industries including 3D printing, has withdrawn its tender offer to acquire HP.

According to the American manufacturer, the current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to such type of acquisition. The company adds that, at present, the health, safety and well-being of our employees, customers, partners and other stakeholders, are their major priority.

For the AM industry, the merging of these two printing giants would have created a major player with unrivalled solutions for various industries. As a reminder, Xerox’ major strategy towards 3D Printing reached a decisive milestone when it acquired Vader Systems, a New York-based manufacturer of liquid metal jet 3D printers. However, it is at Formnext 2019 that the company made its official entrance in the 3D Printing world.

However, in a letter issued last week, HP’s board of directors explains that with a proposal of $34 billion, Xerox undervalues HP, and creates meaningful risk to the detriment of their shareholders: 

« We have consistently expressed deep concerns about the irresponsible capital structure that is reflected in Xerox’s proposal. Their proposed structure would saddle HP with a level of debt that it could not support, potentially leaving the company without the cash needed to effectively run the business. We believe this would put the company at risk of being in financial distress immediately upon consummation of Xerox’s proposed transaction. On top of this, the highly leveraged capital structure Xerox wants to implement could threaten the stability of the entire HP ecosystem and the livelihoods of our employees, customers and partners.

With regard to the cash portion of Xerox’s proposal, it is also important that HP shareholders understand that there would be six to 12 months of significant uncertainty before knowing whether the conditions are satisfied, and the transaction could be funded and closed. Even if Xerox is able to maintain its bridge commitments and raise additional equity financing, which is far from certain in the current climate, there are many conditions to its proposal that create uncertainty. These include regulatory approval across many countries, funding of the bridge commitments, new funding for the ongoing business, and Xerox’s securing approval of the transaction by its own shareholders.

We remain firmly committed to creating value for our shareholders and the principles that we have articulated that drive value. (…). »

Last but not least, although it recognizes the long-term financial and strategic benefits that would have aroused from this merging, Xerox deplores the refusal of HP’s Board to meaningfully engage over many months and its continued delay tactics.

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