China’s Tsinghua Unigroup Ltd. is taking control of H3C, the Chinese networking unit of Hewlett-Packard Co. (HP).
Tsinghua will announce on Thursday its acquisition of a 51 percent stake in H3C, the Wall Street Journal reported Wednesday, citing people with knowledge of the plan.
HP and Tsinghua Unigroup signed a letter of intent on April 23 to cooperate and have been waiting for approval from China’s National Development and Reform Commission, the report said.
The agreed price was not immediately clear, but preliminary discussions had valued the entire H3C business at about US$5 billion.
The Wall Street Journal reported in March that HP and Tsinghua Unigroup were nearing a deal for the unit, formally called H3C Technologies Co.
HP and other United States technology companies have faced a more difficult business environment in China after revelations the US government used infrastructure belonging to American companies for spying.
HP limited its list of bidders for H3C to Chinese companies due to the headwinds facing foreign firms.
A deal would mark the latest of a string of acquisitions for Tsinghua Unigroup, a low-key Chinese state-owned conglomerate that became the country’s largest microchip firm after acquiring two of the largest Chinese mobile chip firms in 2013.
Chip maker Intel Corp. is also a partner of Tsinghua Unigroup, having bought a 20 percent stake last year for US$1.5 billion.
H3C is a major supplier of networking gear in China and was formed in November 2003 as a joint venture between China’s Huawei Technologies Co. and 3Com Corp. 3Com bought out Huawei in 2006, and HP inherited the business when it bought 3Com in 2010.
H3C has 5,000 employees worldwide, according to its website.
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