HP calls for Xerox to halt hostile takeover as coronavirus routs global economy

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NORWALK, Connecticut and PALO ALTO, California — As the world tries to contain the spread of the COVID-19 virus, HP Inc. (NYSE: HPQ) is asking its shareholders to put a hold on speaking with Xerox Holdings Corp. (NYSE: XRX) about the latter’s takeover efforts of one of Northern Colorado’s legacy tech employers.

In a letter to shareholders issued Wednesday afternoon, HP said the company already has its hands full monitoring the effects of the continued spread of the novel coronavirus in the U.S. and abroad, and Xerox’s continued attempts to force a combination would take resources away from HP’s attempts to protect the company’s value and serve its customers.

“Any complex, large-scale, highly leveraged transaction in the current economic environment could be disastrous for HP, its shareholders and our entire ecosystem,” the company’s letter reads. “While we remain open-minded about M&A as a tool to add value for HP shareholders at the right time and on the right terms — it’s abundantly clear that now is not that time.”

HP also said the $24 billion in debt Xerox plans to take out to finance the deal would immediately put a combined successor company in distress and threaten the livelihoods of employees and customers alike.

Xerox has been engaged in a hostile takeover attempt of HP since November after the Palo Alto-based computer maker rejected an unsolicited $33 billion bid. Xerox has since upped the value of its bid to $34.8 billion and is trying to convince HP shareholders to either sell their stock to Xerox or vote in a slate of candidates Xerox deems friendly toward a takeover.

HP has long been a major tech employer for the region, once employing thousands in Loveland and Greeley before slowly shrinking its footprint to just one office in Fort Collins. About 600 people work at the Fort Collins office, according to estimates from LinkedIn data.

HP Enterprise Inc. (NYSE: HPE) also has offices in Fort Collins and Boulder, but is a separate company spun off years ago from HP Inc.

Whether or not Xerox calls a cease-fire may be determined by billionaire investor and former Trump administration advisor Carl Icahn, who HP blamed months ago for pushing the takeover attempt in the first place. Icahn developed a reputation for hostile takeovers in the 1980s when he purchased a controlling stake in the now-defunct TWA Airlines. 

Keith Cozza, the chair of Xerox’s board, is the CEO of Icahn Enterprises LP, and Icahn has minority stakes in both Xerox and HP. Icahn also slammed HP in an open letter from early December, saying the company was “rearranging the deck chairs on the Titanic” by refusing to combine with Xerox.

Icahn most recently took a 10 percent stake in Occidental Petroleum Corp. (NYSE: OXY) in an effort to take larger control over the largest producer of oil and gas in Weld County. On Wednesday, the Houston-based Occidental agreed to place three Icahn affiliates on its board in exchange for Icahn rescinding several stockholder proposals at the company’s annual meeting  this year.

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