Hewlett-Packard sells stake in mainland unit for USD2.3B

Hewlett-Packard Co. sold a majority stake in its Chinese server, storage and technology assets for USD2.3 billion to Tsinghua University.
A group owned by the Chinese university, Tsinghua Holdings, will purchase the 51 percent stake in a new business called H3C. The deal values the businesses at $4.5 billion net of cash and debt, the companies said yesterday in a statement.
HP will maintain ownership of its other businesses in China, including business services, software, HP Helion Cloud and other operations.
H3C will have about 8,000 staffers and $3.1 billion in annual revenue.
The U.S. company is the first major foreign firm to pass control of Chinese operations to local owners since the government stepped up restrictions on overseas hardware companies.
China has been encouraging the use of local suppliers and aims to purge most foreign technology from the country’s banks, military and government enterprises by 2020, people with knowledge of the matter said in December.
Hewlett-Packard’s networking units had “a rougher than anticipated” quarter, Chief Executive Officer Meg Whitman told analysts in late February, noting that they struggled in China especially. Networking sales in the three months ended January 31 fell 11 percent from a year earlier.
Hewlett Packard Co. is undergoing a broader restructuring as it prepares to split into two companies by Oct. 31.