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U.S. printer maker Xerox Holdings Corp walked away from its $35 billion hostile cash-and-stock bid for HP Inc on Tuesday, after the coronavirus outbreak weighed on its campaign to take over the PC and printing equipment manufacturer.

Xerox’s decision came after it said earlier this month it would postpone meetings with HP shareholders to focus on coping with the coronavirus pandemic.

It represents a victory for HP CEO Enrique Lores, who faced a takeover battle as soon as he took over the reins of the Palo Alto, California-based company in November, and a defeat for Xerox CEO John Visentin, a former Hewlett-Packard and IBM Corp executive with ties to the private equity industry who took over as Xerox CEO in 2018.

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It is also a blow for billionaire investor Carl Icahn, who owns big stakes in both companies and had pushed for their merger.

Xerox was set to challenge HP’s board at the latter’s annual meeting of shareholders in May, but will now abandon this effort as well as its tender offer for HP’s shares, the company said 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,” Xerox said.

Xerox added that there were compelling long-term financial and strategic benefits in a potential combination with HP. While it is possible that the companies will choose to engage once the coronavirus crisis subsides, Xerox’s decision means that it will not get another chance to put such pressure on HP until its next annual shareholder meeting in spring 2021.

The banks financing Xerox’s takeover bid “never wavered in their commitments” despite the market turmoil fueled by the coronavirus outbreak, the Norwalk, Connecticut-based company said.

“HP would like to thank our shareholders, partners, customers and employees for their input and continued support through this process,” HP said in a statement.

The market rout triggered by the global coronavirus outbreak has led many companies to hit the pause button on mergers and acquisitions, sabotaging the hopes of corporate advisers who expected a dealmaking bonanza this year.

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Both Xerox and HP have seen their business suffer in the wake of the coronavirus crisis, though HP’s stock has proved more resilient, as employees working for home to protect themselves from the virus boosted revenue for its PCs and other office equipment. Xerox shares have lost more than half their value in the last five weeks, while HP shares are down about a quarter.

PRINTING IN DECLINE

The printing industry is in decline as companies and consumers turn to digital documents to save money and help the environment. This has put pressure on companies in the sector to consolidate and reverse their revenue decline through acquisitions that can boost their market share.

HP, which separated from servers and networking equipment provider Hewlett-Packard Enterprise Inc in 2015, has participated in this consolidation, acquiring Samsung Electronics Co Ltd’s printer business for $1.05 billion in 2017.

Nevertheless, HP had been reluctant to engage in deal discussions with Xerox since November, when the latter launched its takeover campaign after reaching a settlement with Fujifilm Holdings Corp that resolved a legal dispute over their 57-year-old joint venture and a previous attempt to merge, yielding a $2.3 billion after-tax payoff for Xerox.

HP said that Xerox’s offer undervalued it and disputed the $2 billion value of potential cost synergies that Xerox put forward in a possible combination. It argued that its sale to Xerox would saddle the combined company with too much debt, and also raised questions on the impact on Xerox’s supply chain of losing Fujifilm as a partner.

HP engaged in deal talks with Xerox last year at the invitation of Icahn, a top Xerox shareholder who has since also acquired a stake in HP. These talks stalled after the companies failed to agree on the amount of confidential information they shared with each other.

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HP relies on its desktop and notebook PCs business for the majority of its net revenue but gets the bulk of its earnings from its printing hardware and supplies division.

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