Hewlett-Packard sells China unit stake for $2.3bn

HP is selling a controlling stake in its Chinese server business to a local company

US tech giant Hewlett-Packard is selling a 51% stake in its Chinese server business for $2.3bn (£1.4bn) to Tsinghua Holdings.

The deal brings together HP with the investment arm of China's Tsinghua University in a joint venture called H3C, worth $4.5bn.

The new firm is being touted as the leader in China for computer servers, storage and technology services.

It will have about 8,000 workers and $3.1bn in annual revenues, HP said.

"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."

H3C will become a subsidiary of Unisplendour, which is the publicly traded unit of Tsinghua Holdings.

Meanwhile, the California company, which is one of the world's largest makers of personal computers, said it would still fully own its existing China-based enterprise services, PC business and other operations in China.

This latest move comes after the tech giant announced a plan last year to split itself into two separate companies - with one focusing on PCs and printers, and the other on software and enterprise services.

It also follows reports of the Chinese government worried about US cyberspying through tech firms and encouraging Chinese businesses to use local technology services.

The sale of the Chinese unit is expected to be completed by the end of this year and is subject to shareholder vote and regulatory approvals.