Hewlett-Packard and Tsinghua Holdings have announced a partnership to dominate the Chinese enterprise, storage and server marketplace.
Unveiled on Thursday, the agreement will result in a new business called H3C, comprising H3C Technologies and HP's China-based server, storage and technology services businesses. Under the terms of the agreement, Tsinghua's subsidary, Unisplendour Corp., will purchase a 51 percent stake in the new company for roughly $2.3 billion -- valuing the total business at $4.5bn net in cash and debt.
HP says the combination of both companies will result in the new H3C becoming 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."
H3C will become a subsidiary of Unisplendour of Tsinghua, which acts as the asset management arm of the Tsinghua University in China. Unisplendour is currently among the top software vendors and system integrators in China and has been in a long-term strategic distribution partnership with HP since 1999. Hewlett-Packard will retain full ownership of its existing China-based businesses, including HP Enterprise Services, Software, HP Helion Cloud, Aruba Networks, as well as the firm's Printing and Personal Systems unit.
The new venture will become the exclusive provider for HP's server, storage and networking portfolio and hardware support services in the country. H3C, which will account for roughly 8,000 employees, is expected to generate approximately $3.1 billion in annual revenue.
The transaction is expected to close by the end of 2015, subject to a vote by Unisplendour shareholders.
Weiguo Zhao, Chairman of Tsinghua Unigroup and Unisplendour Corporation commented:
"The transaction for H3C will release great potential in the China market. Tsinghua has enjoyed a long-term partnership with China HP and H3C. We see extensive synergies with the new H3C.
Tsinghua University's leading R&D capability, wide domestic resources, and vast human capital resources will empower the new H3C's growth in the short-term, mid-term, and long-term. We are pleased to announce and look forward to a strong partnership with HP in the many years to come."
In May, the tech giant unveiled a new technology lab located in Sofia, Bulgaria's capital. HP invested €5.1 million in the creation of the center, which will be used for employees to gain experience and training in the firm's latest technological advances. In addition, HP's Technology Lab will also provide support and resources for local educational institutes such as the Technical University in Sofia and the John Atanasov High School of Electronics.
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