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Tech takeovers – Xerox launches a takeover bid for HP | Business

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IF THE BOARD won’t agree, try the shareholders directly. After nearly a year of advances, on March 2nd Xerox made a formal tender offer for HP, a much bigger rival computer-and-printer-maker. It is willing to pay HP’s shareholders $24 a share, valuing the company at $35bn. That is a third higher than its market capitalisation before Xerox made its intentions clear in November—and five times that of Xerox itself.

Both firms are Silicon Valley royalty, left behind by the pace of a technological revolution they did much to shape. Xerox—particularly its fabled Palo Alto Research Centre—helped invent photocopying, laser printing, desktop computers and the “graphical user interfaces” that everyone now takes for granted. A plaque commemorates the garage where Bill Hewlett and David Packard founded HP, with $538 of capital, as “the birthplace of Silicon Valley”.

These days Xerox’s printing business looks to be in long-term decline. The paperless office may be a pipe dream, but IDC, a research firm, forecasts that the number of pages the world prints each year will drop from around 3trn in 2017 to 2.6trn or so in 2023. Xerox’s revenues have fallen every quarter since 2016 bar one, year on year.

HP, too, has struggled in the smartphone age. Besides its own range of printers, it is the world’s second-largest seller of personal computers (PCs). That market is also now shrinking. An uptick of 0.6% in worldwide PC shipments in 2019, to 261m units, was the first increase in seven years. In the age of mobile devices no one expects a PC revival.

Xerox argues that joining forces would help both firms compete. It promises $2bn of annual cost savings after two years. However, Katy Huberty of Morgan Stanley, a bank, points out that the two companies’ printing-product lines are mostly complementary, with HP specialising in smaller machines than Xerox.

The tech industry has a history of ill-judged mergers (HP’s own acquisition of Compaq, a rival computer-maker, in 2002 being a prime example). Xerox’s plan to swallow a firm five times its size looks ambitious, to put it mildly. Bad blood could complicate things further. HP’s board rejected an earlier offer of $22 a share, made in November, saying it “significantly undervalues” the firm. In February HP said it would return $16bn to its shareholders, in an attempt to block the deal.

Xerox has one thing going for it. Among its big shareholders is Carl Icahn, an activist investor with a string of hostile takeovers to his name (and a stake of around 4% in HP). The markets seem optimistic. Despite the coronavirus-inspired slump, both firms’ share prices remain higher than before Xerox came a-wooing.

This article appeared in the Business section of the print edition under the headline “Xeroxing HP”

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Some businesses better off staying closed: Chamber president – BC News

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Some businesses could be better off staying closed than risk re-opening during the second phase of the B.C.’s government’s plan to safely and gradually re-open the economy, according to Val Litwin, president and CEO, BC Chamber of Commerce.

“This crisis isn’t over for BC businesses. You can go out of business much faster with a partial or failed reopen than you can a temporary closure,” Litwin said. “Policy-makers must appreciate that business models will be very fragile during this early stage of the recovery cycle and that ongoing supports will be essential.”

Only 26 per cent of businesses impacted by COVID-19 feel able to restart and operate profitably with the gradual easing of restrictions, according to a survey of 1,343 member-businesses of the BC Chamber of Commerce, Greater Vancouver Board of Trade, Business Council of British Columbia, and other partners. 

The survey, conducted with the Mustel Group, was released May 22.

Given the challenges to restarting operations, over half of the members surveyed (55 per cent) expect it will take at least two months to restart.

The survey also found that 43 per cent of  businesses expect that they will still require significant and additional financial support or incentives from the provincial and federal government in order to continue operating. 

One of the challenges for business tenants is paying the rent.

The survey found that 26 per cent of commercial tenants were unable to pay their rent in full in April. The primary reason is that they were shut down and had no revenue (75 per cent). Others had no access to the federal Commercial Rental Assistance ( 30 per cent), while 19 per cent said they could not come to terms with their landlord.

In terms of businesses that have closed temporarily, the level is slightly higher in urban markets (50 per cent) than in rural (42 per cent), with the incidence highest in healthcare and social assistance; arts and entertainment; and accommodation and food services, all above 68 per cent.

Among retail establishments, 58 per cent will remain closed, at least temporarily. 

“The survey data shows virtually all respondents continue to experience lost revenue as a result of COVID-19 and restart efforts will be hampered by an inability to attract new and returning customers. We are facing the worst year for B.C.’s economy and job market in a century,” said Greg D’Avignon, president & CEO of the Business Council of British Columbia. He called on governments to “expedite economic activity and address competitiveness barriers in the form of tax, regulatory and process costs that stand in the way of businesses re-hiring the nearly 400,000 employees who’ve lost their jobs.”

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Brunswick business put on ice due to work permit rule

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BRUNSWICK, Ohio — When COVID-19 was declared a worldwide pandemic in mid-March, Brunswick resident Celeste Compola watched subsequent school and business closures with the somewhat heightened anxiety of all small business owners.

“When (Gov. Mike DeWine) announced the essential businesses and was asking food trucks to help at rest areas, I thought, ‘Cool, I’m a food truck,’” said Compola, owner of Celeste’s Tasty Treats Food Truck, an ice cream business she started three years ago after working for another company for two years.

Working in her hometown during the summer of 2020, however, has proved more complicated that Compola could have imagined.

As has been the case for the past two seasons, Compola received her approval from the Medina County Health Department and applied for a vendor’s permit in Brunswick in April.

“But when I dropped (the vendor’s permit application) off at the police department, I was told no,” she said.

In an effort to slow the spread of COVID-19, the city has temporarily suspended the issuing of permits to door-to-door solicitors. As it turns out, ice cream trucks are categorized as door-to-door solicitors in Brunswick.

“It wasn’t until coronavirus that this was brought to anyone’s attention,” Compola said. “Of all the ways I thought I would be affected by COVID, I never thought it would be this.”

Revisiting business designation

While the issue is being addressed by the city, a resolution is not expected before the next City Council meeting on June 8 — meaning the last few months is time Compola will not be able to recover, even though she has been permitted to operate in surrounding communities.

At a May 19 Economic Development Committee meeting, City Councilman Joe Delsanter said that while there are additional precautions that need to be taken with a business that predominately serves children — such as an ice cream truck — the business itself is essentially a food truck, in his opinion.

“At Honey Hut, you might have 40 cars wrapped around (the building),” Delsanter said. “The only difference here is that the vendor is coming through the neighborhood.”

Economic Development Committee chairman Councilman Nick Hanek moved to have the city law department further review the ice cream truck designation, for possible legislation as soon as the June 8 council meeting.

The committee agreed with Hanek’s motion, but Delsanter said he hopes Celeste’s Tasty Treats’ dilemma can be resolved without the need to “write a law,” due in part to the seasonal nature of the business and the time and money Compola has already lost.

Councilman Anthony Capretta echoed these sentiments in an interview last week with the Brunswick Sun.

“This is an exception to the rule,” Capretta said. “We are stopping treats for kids because of this COVID thing. If (City Manager Carl DeForest) isn’t going to put his name on (the permit), I’ll put my name on it. We will keep fighting until this lady gets her permit.”

Emotional toll

Compola said Brunswick makes up about 75 percent of her customer base. But the emotional strain of the permit denial, she said, has had at least as much of an impact as the financial loss.

“I will make a full recovery,” she said. “This community and I have really clicked. But I live here, and I can’t even drive out of town to do a private party, or park the truck in my driveway, without breaking a bunch of hearts.

“The kids don’t understand (why Compola is not permitted to stop). It’s had an effect on an emotional level. Yeah, it has really affected me.”

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Commercial rent relief program opens but businesses say it will help few

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Commercial landlords can begin applying for a government rent relief program on Monday, but struggling businesses say it will benefit few of them.

The Canada emergency commercial rent assistance (CECRA) program aims to reduce the rent owed by small business tenants by 75 per cent for April, May and June.

Applications are staggered depending on the province where the property owner is located and the number of tenants, beginning Monday with those in Atlantic Canada, British Columbia, Alberta and Quebec, with up to 10 tenants who are eligible for the program.

The rent relief plan, funded jointly with the provinces, provides non-repayable loans to commercial property owners to cover 50 per cent of the monthly cost.

The loans will be forgiven if the property owner agrees to cut the rent by at least 75 per cent for those months and promises not to evict the tenant. The small business tenant must cover the remaining portion of the rent, which would be up to 25 per cent.

To qualify, small business tenants must pay less than $50,000 a month in rent. They also must have experienced a revenue decline of at least 70 per cent from pre-COVID-19 levels or they must have been forced to close down because of pandemic restrictions. Non-profit and charitable organizations are also eligible.

Businesses fear eviction

The Canadian Federation of Independent Business says many small businesses won’t be able to make June rent without more assistance. Through a survey of its members, the organization found that most commercial tenants don’t think they will qualify and don’t think their landlord will participate.

With many fearing eviction, they’re calling on the government to provide direct access to the government portion of the program.

The Canadian Chamber of Commerce announced Monday it is launching a small business relief fund supported by software company Salesforce. It will give 62 small businesses $10,000 grants to pay salaries, buy personal protective equipment, replenish materials or adapt business models to deal with COVID-19.

Applicants that best demonstrate how the funds will help the business, their employees and their communities with economic recovery efforts will get the funding.

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