Xerox Holdings Corp. ended its hostile takeover bid for HP Inc. because of uncertainty stemming from the Covid-19 pandemic, marking a blow to the photocopier company’s efforts to stimulate future growth.

The Norwalk, Connecticut-based company will withdraw its tender offer to HP shareholders and stop an effort to win a slate of board directors. Xerox believes the underlying logic behind a combination remains sound and may revisit the idea in the future, said a person familiar with the issue who asked not to be identified discussing company deliberations. The news was first reported by the Wall Street Journal.

“The current global health crisis and resulting macroeconomic and market turmoil caused by Covid-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc.,” Xerox said Tuesday in a statement. “While it is disappointing to take this step, we are prioritizing the health, safety and well-being of our employees, customers, partners and other stakeholders, and our broader response to the pandemic, over and above all other considerations.”

HP, the world’s second-largest computer maker, has repeatedly rebuffed Xerox’s cash-and-stock offers, most recently valued at an estimated US$35 billion. In the most recent proposal, an HP holder would have received US$18.40 in cash and 0.149 Xerox shares. The offer was set to expire April 21.

HP implored shareholders to reject the tender offer and board proxy fight, suggesting that a debt-enabled combination would be “disastrous” for the hardware giant in the current economic environment.

HP’s shares fell 1.5 per cent in extended trading after closing at US$17.36. Xerox’s stock was little-changed after ending Tuesday’s session at US$18.94

Xerox, which has reported falling revenue, had hitched its future to an acquisition. The company expected that combining the companies would yield US$2 billion in cost savings and more than US$1 billion in additional revenue growth. Both hardware companies invented technologies still in use by consumers and office workers, and have struggled in a world increasingly driven by software.

HP’s board characterized Xerox’s offers as undervaluing the Palo Alto, California-based company, and said it will return US$16 billion to shareholders in an effort to show the company can stand on its own.

Xerox criticized HP for failing to enter into substantive talks that could have led to a merger.

“The refusal of HP’s Board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction,” Xerox said.