Hewlett-Packard Company (NYSE:HPQ) is not too far in a deal to sell control of its data networking business in China to Tsignhua Unigroup Limited, which has come up as the preferred bidder in an auction of 51% of the business, H3C Technologies Co.
The deal is believed to be only a few weeks away and there is no guarantee another bidder won’t re-emerge and is also found to be including a separate server operation.
According to few anonymous sources, Tsinghua Unigroup had been competing with other bidders for the business, which is worth roughly a sum of approx. US$5 billion, including Telecommunication Economy Development Centerand China Huaxin Post.
Also, acquisition of control of H3C would be giving Tsinghua Unigroup a major presence in China’s networking gear market after it recently purchased two of China’s largest chip designers. Also, HP that was driven by the issue to seek a buyer for the business limited the list of bidders for H3C to domestic companies so that it could win Chinese government approval for the sale and boost the prospects for the operation there.
Tsinghua Unigroup also signed a strategic alliance with Intel Corp. that gave the U.S. chip maker 20% of the Chinese company’s shares for a price of US$ 1.5 billion last year in September.
Not to mention, H3C is a major supplier of corporate-data networking gear in China.H3C was formed in November 2003 as a joint-venture between China’s Huawei Technologies Co. and 3Com. The H in its name stands for Huawei and the 3C stands for 3Com. According to its official website, it has 5,000 employees world-wide.
HP earlier last year decided to split itself into two categories i.e. The Silicon Valley announced a plan to split into two piece; one focused on corporate buyers of hardware and services and the other on selling personal computers and printers. Upon which, HP planned to do acquisitions on the corporate side where a sale of H3C could give it cash to bolster that effort.
