US tech giant Hewlett-Packard has announced it is selling a 51 per cent stake in its Chinese server business to Tsinghua Holdings for $2.3 billion (£1.4 billion).
Tsinghua Holdings' subsidiary Unisplendour Corp Ltd will acquire the 51 percent stake in HP's H3C Technologies to form a partnership affiliated with China's Tsinghua University.
The joint-venture, called H3C and worth $4.5 billion, is expected to be a leader in China for computer servers, storage and technology services. It will have about 8,000 workers and $3.1 billion in annual revenues, HP said in a statement.
US tech companies struggling in China
HP is the first major US tech company to pass control to local owners since Beijing stepped up restrictions on foreign firms and encouraged the use of local suppliers.
"HP is making a bold move to win in today's China," said chief executive Meg Whitman in a statement. "Partnering with Tsinghua, one of China's most respected institutions, the new H3C will be able to drive even greater innovation for China, in China."
US tech companies are also increasingly seeking local partners in China after being hit by Edward Snowden's revelations of a cyberspying program involving some large tech firms.
HP's move comes a year after the tech giant announced a plan to split itself into two separate entities – with one focusing on PCs and printers, and the other on software and enterprise services.
The company is due to report results of its second fiscal quarter later today. Analysts expect HP to post per-share earnings of 86 cents on $25.6 billion in revenue and to forecast earnings of 87 cents on $25.9 billion for the third quarter ending in July.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.