HP sells servers to China

Hewlett-Packard (HP) has unveiled plans to sell a 51 percent stake of its Chinese server business to Tsinghua Holdings, as part of its five-year turnaround plan and broader restructuring efforts. The IT giant announced last October that it would split into two publicly traded Fortune 500 companies before October 31 this year, with one focusing on personal systems and printers, and the other software and enterprise services. The acquisition will strengthen HP’s foothold in the market.

Tsinghua Holdings, the investment arm of Tsinghua University, will acquire a majority stake in the company for $2.3bn, and, in doing so, create a new joint venture called H3C. With an estimated market cap of $4.5bn, the new entity will employ some 8,000 workers and turn approximately $3.1bn in annual revenues, according to company sources. It will be the leading provider of converged infrastructure solutions and technology services in China.

The new entity will turn approximately $3.1bn in annual revenues

“HP is making a bold move to win in today’s China”, said Meg Whitman, Chairman and CEO of HP in a statement. “Partnering with Tsinghua, one of China’s most respected institutions, the new H3C will be able to drive even greater innovation for China, in China. The combined company will build upon an extensive and valuable patent portfolio, best-in-class products and customer focus, and Tsinghua’s world-class research capability. In one move, we have repositioned HP and H3C to accelerate overall performance and better serve our customers and partners.”

The announcement has arrived in the last of a five-year turnaround plan, in which HP has reignited its innovation pipeline, strengthened its go-to-market capabilities and rebuilt its balance sheet, according to company sources. The deal means H3C will create a Chinese technology powerhouse, becoming the number one name in networking and a leading force in servers, storage and technology services.