Hewlett Packard Enterprise Thinks it is Not the Right Time to Merge with Xerox

In light of the coronavirus pandemic across the globe, Hewlett Packard Enterprise (HPQ) warned its shareholders that advancing Xerox’s proposed tender offer could be “disastrous” during this time.

HP said that Xerox’s offer would burden the company with a debt level that could potentially threaten its cash needs.

“Any complex, large-scale, highly leveraged transaction in the current economic environment could be disastrous for HP,” the company said in a letter to shareholders. “While we remain open-minded about M&A as a tool to add value for HP – it’s abundantly clear that now is not that time.”

HP is concerned that the “highly leveraged capital structure” Xerox is proposing could threaten the company’s stability.
It was in early March that Xerox had made an offer to buy HP.

John Visentin, Xerox vice-chairman and chief executive officer, has said, “As we closely monitor reports from government and healthcare leaders across the globe and work with colleagues in the business community to minimise the spread and impact of the virus, we believe it is prudent to postpone releases of additional presentations, interviews with media and meetings with HP shareholders so we can focus our time and resources on protecting Xerox’s various stakeholders from the pandemic.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.