HPE To Sell 30 Percent Stake In H3C For $2.1B; Amends China Joint Venture Deal
HPE will sell 30 percent of its stake in China-based H3C for $2.1 billion, with the option of selling its remaining 19 percent share, HPE said in a regulatory filing today.
“The HPE Parties and UNIS [Unisplendour Corp.] have entered into the revised arrangements to restructure the Shares sale process in a manner that is expected to facilitate the sale by the HPE Parties of 30 percent of the total issued share capital of H3C to UNIS for approximately $2.1 billion by or before August 31, 2024,” said HPE’s filing today with the U.S. Securities and Exchange Commission.
Additionally, Spring, Texas-based HPE has an option to sell its remaining 19 percent share of H3C at a later time.
“[HPE is] preserving an option to sell the remaining 19 percent of the total issued share capital of H3C for approximately $1.4 billion to UNIS at a later date,” HPE said.
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HPE currently owns an approximately 49 percent share of H3C. China-based H3C is HPE’s exclusive provider of HPE servers, storage and associated technical services in China.
The move by HPE today enables the company to generate billions of dollars in cash quickly by the end of August.
HPE did not respond back to CRN by press time for comment on the matter.
HPE’s Filing Comes One Year After H3C Agreement Reached
In May 2023, HPE entered into an agreement to sell its 49 percent stake in its H3C Chinese enterprise IT joint venture for $3.5 billion.
HPE holds a 49 percent share in H3C with Chinese IT provider Unisplendour holding the remaining 51 percent.
The original H3C joint venture allowed HPE to successfully compete in the challenging China-based enterprise IT market. The venture started in 2010 when Hewlett Packard acquired 3Com which had created H3C as a collaboration with Huawei.
In 2015, Tsinghua Holdings subsidiary, Unisplendour Corp., purchased a 51 percent stake in H3C, from Hewlett Packard at a $2.3 billion price tag. At that time, H3C had 8,000 employees and $3.1 billion in annual revenue made up of a complete portfolio of enterprise IT solutions, including networking, servers, storage and services.
HPE Acquisition Ahead?
When HPE unveiled the plan to sell its 49 percent stake of H3C in 2023, financial advisory firm UBS said it believes HPE “could use a large percentage of the proceeds to pursue a strategic transaction.”
In the 2023 SEC 8-K filing, HPE disclosed its plans to use the cash for a range of activities including but not limited to “both organic and strategic investments, return of capital to shareholders, repayment and/or redemption of outstanding debt, and general corporate purposes.”
HPE’s 30 percent sale of its H3C shares to Unisplendour must pass all necessary regulatory China approvals before the deal is finalized.