HP to sell Chinese unit
March 27, 2015
Tsinghua Unigroup has emerged as the preferred bidder for 51 percent of H3C Technologies.
HP is nearing a deal to sell control of its data-networking business in China to Tsinghua Unigroup Ltd., the Wall Street Journal reported.
A deal between the two parties, which may also include a separate server operation, is likely still a few weeks away and another bidder may still re-emerge, sources have said. Tsinghua Unigroup has been sparring for the $5 billion (€4.6 billion) deal with other bidders including China Huaxin Post and Telecommunication Economy Development Centre.
Extra pressure to find a buyer has been put on HP and other US technology companies in China after it emerged that the US government surreptitiously collected data and other information, in some cases using American companies’ infrastructure. HP has limited its list of bidders for H3C to domestic companies in an attempt to win Chinese government approval for the sale and boost prospects for the operation there.
Purchasing H3C would add to Tsinghua Unigroup’s growing networking gear market portfolio, following its recent purchase of two of China’s largest chip designers. The company also signed a contract with Intel in September 2014 which gave the US chipmaker 20 percent of Tsinghua Unigroup’s shares for $1.5 billion (€1.3 billion).
H3C is a major supplier of corporate-data networking gear in China, formed in November 2003 as a joint venture between China’s Huawei Technologies Co. and 3Com Corp. It became part of HP in 2010 when HP bought 3Com, and employs 5,000 worldwide.
The Recycler reported on HP’s plans for a major reshuffle last week, as it has been announced that the company’s split into HP Enterprise and HP Inc. is due to take place in November 2015. HP has indicated it may do acquisitions on the corporate side, and selling H3C could give it cash to bolster that effort.
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