Hewlett-Packard spins off China server unit for $2.3 billion
Hewlett-Packard is selling a majority stake in its Chinese server and storage unit for $2.3 billion to Tsinghua Holdings.
The company will sell its 51% stake in the business to Tsinghua Holdings, part of Tsinghua University, to create a joint venture called H3C, said to be worth $4.5 billion.
According to HP, it will have approximately 8,000 employees, $3.1 billion in annual revenue and an adjusted operating profit of $400 million.
"HP is making a bold move to win in today's China," said CEO Meg Whitman. "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."
At the company’s last earnings call in February 2015, Whitman cited execution issues in China for the lacklustre results in its network business. The company has also made changes to its leadership in the country.
The leadership for the newly-created company has yet to be appointed. HP expects the deal to close towards the end of this year.
In October 2014, the company announced that it is to split into two companies, separating its computer and printer business from its corporate hardware and services operations. The division is expected to be complete by the end of the 2015 financial year.