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On 4/1/2020, Xerox Holdings Corp. announced that it is pulling the plug on its hostile bid...

On 4/1/2020, Xerox Holdings Corp. announced that it is pulling the plug on its hostile bid to buy larger rival HP Inc. after the coronavirus pandemic undermined the copier maker's ability to pull off the debt-laden merger. Xerox said it is ending both its more than $30 billion tender offer and a proxy fight to replace the printer and PC maker's, board. Xerox concluded it is no longer prudent to pursue the deal given the public health crisis and resulting market swoon. News reported earlier that Xerox planned to abandon its efforts. The move puts the kibosh on one of the biggest mergers in the works and underscores the blow that the coronavirus has dealt with the world of deal-making. Xerox's move to acquire HP, a company three times their size, was considered audacious and, in hindsight, it does not seem surprising that they have ended their efforts. Based on the article, why was Xerox initially confident of its approach? As a result of the COVID-19 crisis, what challenges do you think Xerox faced in the run-up to the method HP shareholders meeting that led to its decision to abort the takeover of HP? Irrespective of the transaction, what are the challenges that the two companies face going forward?

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Expert Solution

Because of the covid 19 Xerox has put hold on their plan to takeover HP the reasons for this are as follows:

  • there is worldwide lockdown in the economy that has caused serious recession in the economy and it is never good option to takeover during recssion
  • there are less profits in both the firms because of the pandemic as they are not operating full
  • people will not invest at this time much
  • the sector to which these company belongs is affected much because they are not the necessity
  • it will be difficult for the company to arrange funds to takeover etc are reasons they have hold the takeover plan.

Now the challenges that both companies will face forward will be:

  • there will be loss of profit in future
  • difficulty in bearing the fixed expenses
  • employee cost will increase and if they fire some employees then recruitment cost to again hire them
  • management difficulty
  • cyber crime problems etc

jeff jeffy answered 2 years ago
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