Tsinghua buys HP’s China data-networking business – update

According to a statement, H3C Technologies and HP's other China-based server, storage and technology services businesses will be spun out into a new entity. Unisplendour Corporation, a publicly-traded subsidiary of Tsinghua Holdings, an investment entity controlled by Beijing-based Tsinghua University, will have a 51% stake with HP's holding the remainder. 

The new entity, known as H3C, will have more than 5,700 patents and 2,500 engineers. The investment values the business at $4.5 billion, net of cash and debt. China Huaxin Post and Telecommunication Economy Development Center were said among the bidders for the asset.

HP China will maintain full ownership of its existing China-based enterprise services, software, HP Helion Cloud, Aruba Networks, printing and personal systems businesses.

Hangzhou-based H3C Technologies was formed in 2003. It sells a wide range of networking products including switches, routers, network security and management software, internet protocol (IP) storage and IP surveillance technology solutions. The company, which has R&D facilities and product centers in Beijing and Hangzhou, claims to invest more than 15% of revenue back into R&D every year.

With about 8,000 employees, the new H3C will offer customers enterprise IT solutions, including networking, servers, storage and services. It generated adjusted revenue of $3.1 billion for the year ended December 2014, with $400 million in operating profit and $300 million in net income.

"The transaction for H3C will also release great potential in the China market. Tsinghua has enjoyed a long-term partnership with China HP and H3C," said Weiguo Zhao, chairman of Tsinghua Unigroup and Unisplendour, in the statement. "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."

In July 2013, Tsinghua Unigroup, Tsinghua Holding's subsidiary, acquired Spreadtrum Communications, a Chinese mobile chip manufacturer backed by New Enterprise Associates, valuing the company at approximately $1.78 billion. Last September, Tsinghua Unigroup signed a strategic agreement with Intel Corporation, selling a 20% stake to the chip maker for $1.5 billion.

Tsinghua Holdings is a state-owned company responsible for managing the majority of Tsinghua University commercial assets. As of year-end 2012, it had approximately RMB70.4 billion ($11.5 billion) in assets and a net income of RMB1.45 billion.

Tsinghua Unigroup, which has about RMB40 billion in assets under management, focuses on high-tech, biotech, science park development and urban infrastructure investments. The other shareholder in the firm is Beijing Jiankun Investment Group.

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