infoTECH Feature

October 30, 2014

Hewlett-Packard Looking to Sell Chinese Networking Branch

Hewlett-Packard (News - Alert) has slowly and surely been trying to reduce the scope of business when it comes to its central operations. Earlier this year, the firm announced it was basically spinning off its printers and PC ventures. Now there are numerous reports indicating the firm has begun talks with several private equity firms with the end goal being to sell its enterprise networking business to a Chinese purchaser.

The Wall Street Journal is spearheading the reports of this particular sale, crediting rising tensions between the United States and China. These tensions are reportedly hurting the business climate in both countries as well the ability to operate and compete in both markets. A result of these tensions is that HP is now looking for a China-based company to take over the operations of its China-based networking company.

The publication is claiming that discussions with private equity firms is the first step in trying to dump the branch. Others are saying that the sale of the business is in the very early stages and that it might not even sell the company altogether. One report says that HP could resort to simply selling a controlling interest (51 percent) while retaining some ownership rights over the long haul. There is also plenty of talk that Hewlett-Packard might not be able to reach a deal that is beneficial to both sides at all.

If a deal can be struck, industry analysts are saying the sale could be worth as much as $5 billion. This is one of the reasons that the Chinese government has made it clear the buyer will likely have to be local. HP won’t be permitted to sell its enterprise networking branch to a firm in another country, such as Europe, according to most people close to the situation. The good news for HP is it seems likely a potential deal wouldn’t be limited to private equity firms. A Chinese tech company could come in and make an offer Hewlett-Packard can’t refuse.




Edited by Stefania Viscusi
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