Azernews.Az

By Bloomberg

Hewlett-Packard Co.’s sale of a majority stake in its Chinese networking unit has attracted interest from potential bidders including state-owned China Electronics Corp. and Citic Capital Partners, people familiar with the matter said.

Hewlett-Packard aims to complete an agreement to sell 51 percent of H3C Technologies Co. by the end of March, the people said. The deal has also drawn interest from CDH Investments Fund Management Co. and ICBC International Holdings Ltd.’s direct- investment arm RT Capital, the people said, asking not to be named as the process is private. H3C is valued at about $5 billion, a person familiar said in October.

The world’s second-biggest computer maker is seeking to sell control of the business to domestic investors to help H3C win sales to state-owned companies, according to the people. China has been encouraging the use of local suppliers and aims to purge most foreign technology from the country’s banks, military and government enterprises by 2020, people with knowledge of the matter said in December.

The U.S. firm has expressed a preference to sell the stake in Hangzhou-based H3C to a group of Chinese funds rather than a single acquirer, which would dilute their influence on day-to- day operations, two of the people said. The suitors may choose not to partner for their bids, which are due this week, according to the people.

Sarah Pompei, a spokeswoman for Palo Alto, California-based Hewlett-Packard, declined to comment. China Electronics didn’t answer multiple calls to its Beijing headquarters and its press office didn’t reply to e-mails seeking comment. Cindy Tam, a Hong Kong spokeswoman at Citic Capital, didn’t respond to an e- mail seeking comment while representatives for CDH couldn’t immediately be reached.

ICBC International didn’t respond to an e-mail seeking comment. A woman who answered the phone at the company’s office in Hong Kong, who declined to identify herself, said no one was immediately available.

Mao’s Visit

China Electronics is the nation’s largest state-owned information technology company with more than 70,000 employees in operations including computer manufacturing, chip design and telecommunications equipment production, according to its website.

The group, whose website features a photo of Mao Zedong inspecting one of its radio factories in 1956, has 13 listed units including China Greatwall Computer Shenzhen Co. and Nanjing Panda Electronics Co.

Citic Capital oversees more than $4.6 billion, according to its website. The firm is backed by Citic Ltd., the main listed unit of the country’s first state-owned investment corporation, and the sovereign wealth funds of China and Qatar, the website shows. Its investments include AsiaInfo-Linkage Inc., which provides software to phone companies, and digital-advertising firm Focus Media Holding Ltd.

Hewlett-Packard acquired H3C in 2010 as part of a deal to buy networking company 3Com Corp. H3C was previously owned by 3Com and Chinese networking provider Huawei Technologies Co., which sold its stake in the business to 3Com in early 2007.

Networking is one of the smallest parts of Hewlett- Packard’s business, accounting for 2.3 percent of revenue in the year ended October 2014, data compiled by Bloomberg show. The networking business’s sales rose 4 percent that year to $2.63 billion, according to the company’s annual report.