China’s government-backed Tsinghua UNIS purchases controlling stake in HP China’s unit

26 May

U.S. company Hewlett-Packard Co. disclosed in its latest earnings report on May 21 that its network equipment firm H3C Technologies Co. and HP China’s server, data-storage and technology-services businesses were to be merged into a new entity. HP also announced that Tsinghua Holdings under Tsinghua Unisplendour Corporation Limited (UNIS) will purchase 51 percent of the shares in the new entity for US$2.3 billion. 

Huai Jinpeng, the Chinese vice minister of Industry and Information Technology, and Bill Veghte, HP’s executive vice president and general manager, met for a meeting on May 20 with regards to the acquisition. Also in attendance were Tsinghua University Deputy President Cheng Jianping, Tsinghua Holdings Chairman Xu Jinghong and Tsinghua UNIS Chairman Zhao Weiguo. The meeting ended with a US$2.3 billion deal for 51 percent of the newly established entity.

The market capitalization of H3C is estimated at US$4.5 billion. H3C was previously jointly owned by U.S. equipment firm 3Com and China’s Huawei until 3Com purchased the other shares from Huawei in 2007. H3C was brought under HP following HP’s acquisition of 3Com in 2010. It was rumored in October 2014 that HP was planning to sell part of H3C stake to cut operation cost. HP’s plan to sell the shares was also believed to be a move to relieve pressure from the Chinese authorities following the unveiling of U.S. spying activities as well as to obtain permits for its operations in China.

The recent acquisition is also seen as a stepping stone in China’s 10-year plan to become the world’s manufacturing power. The 10-year plan, dubbed Made in China 2025, aims to combine information technology and cutting-edge manufacturing. According to Tsinghua Holdings, the traditional industries are in dire need to transform into information technology. In the future, the new H3C entity will focus on the technology development and products in the areas of big data, cloud computing and mobile communication.

The acquisition is pending approval from its shareholders and China’s supervising agencies. The transition is expected to be completed by the end of 2015.

(Photo courtesy of Flickr/Don DeBold CC BY 2.0)

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