HP has decided to sell 51 percent equity stake in Chinese networking group H3C Technologies and other businesses to Tsinghua Holdings for $2.3 billion.
The development indicates a partial exit of HP from enterprise networking business in China. China has posed problems for HP and its rival Cisco.
Since China is an important market for the company, HP China will maintain 100 percent ownership of its existing China-based Enterprise Services, Software, HP Helion Cloud, Aruba Networks, Printing and Personal Systems businesses.
The transaction includes the H3C networking business as well as HP’s storage and server operations in China, and values the combined entities at $4.5 billion. Lenovo will be one of the rivals of H3C.
Interestingly, HP will announce its Q1 financial result on Thursday.
H3C generated about $300 million in net income in 2014 on $3.1 billion in sales. HP acquired H3C when it purchased 3Com for 2.7 billion in 2010.
The new H3C, comprising H3C Technologies and HP’s China-based server, storage and technology services businesses, will be a technology powerhouse in China with a market-leading portfolio that will be #1 in networking and a leader in servers, storage and technology services.
With nearly 8,000 employees and nearly $3.1 billion in revenue, the new H3C will be the leading provider of converged infrastructure solutions and technology services in the China market. The company will offer enterprise IT solutions, including networking, servers, storage and services, and will maintain H3C’s current customer-first service model.
The new H3C will be the exclusive provider for HP’s server, storage and networking portfolio, as well as HP’s exclusive hardware support services provider in China, customized for that market.
Henry Tso will continue to lead H3C Technologies’ networking business and Ye Jian will continue to lead HP China’s Server, Storage and Technology Services businesses. Separately, Robert Mao will remain the chairman of HP China, which will include HP’s Enterprise Services, Software and Cloud businesses in China.