Enrique Lores

Perhaps facing the "perfect storm" of a global pandemic outbreak; a U.S. stock market response to COVID-19 that has pummeled Xerox and HP stock prices; and Canon's announcement that it will sever business ties with HP if HP's merger with Xerox comes to fruition, Xerox finds itself in a precarious position.

The Xerox offer undervalues HP and disproportionately benefits Xerox shareholders, Chip Bergh, chair of HP’s board of directors, said. It would leave HP shareholders with an investment in a combined company that is burdened with an irresponsible level of debt and unrealistic, unachievable synergies.

As promised, on March 2 Xerox Holdings launched a $34.9 billion hostile takeover proxy bid to acquire HP Inc. for $24 per share , comprising $18.40 in cash and 0.149 Xerox shares for each HP share. The unsolicited "hostile takeover" offer and withdrawal rights are scheduled to expire on April 21, 2020.

On Feb. 20, the HP board of directors adopted a Shareholder Rights Plan ("Poison Pill") to thwart Xerox's planned hostile proxy bid to acquire all of the outstanding shares of HP stock on March 2 for $34.9 billion. In another defensive move, HP announced it will buy back $15 billion worth of outstanding HP shares.

Printing industry supplier Xerox will launch a tender offer on March 2 for all of the outstanding shares of HP stock at $24 per share, comprising $18.40 in cash and 0.149 Xerox shares for each HP share. Xerox indicated it represents a 41% premium. Valued at $34B, it will not be subject to financing or due diligence.

Xerox claims its $33.5 billion acquisition offer amounts to an implied value of $31 per share to HP shareholders, and says HP shareholders would own about 48% of the combined company. But HP's board of directors contends the offer is not high enough to bring HP to the bargaining table for due diligence discussions.