HP seeking buyers for corporate-networking business in China

By Reuters

Oct 26, 2014 12:43 AM EDT

Hewlett-Packard Co (HPQ.N) has begun sounding out private-equity firms in China to buy its corporate-networking business in the country, the Wall Street Journal reported, citing people familiar with the situation.

HP is expected to sell at least 51 percent of the business, H3C Technologies Co, which could be worth roughly $5 billion in a full sale, the business daily said.

HP declined to comment on the report.

The buyer likely needs to be based in China if the deal is to win Chinese government approval, the newspaper reported.

Another Chinese technology company could also buy H3C, a major supplier of corporate data-networking gear in the country, although it is more likely to be sold to a private equity group, the Journal said, without naming any of the potential buyers.

U.S. technology companies such as Cisco Systems Inc (CSCO.O), IBM Corp (IBM.N) and Microsoft Corp (MSFT.O) are facing challenges in China due to a backlash after revelations about U.S. government surveillance programs.

HP, which wants to continue using H3C's low-cost manufacturing, may retain a sizable minority stake in the business in any deal, the Journal said.

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