Partial H3C Sale Closes; One Step Closer to Full Exit

Research evidence excerpt

Partial H3C Sale Closes; One Step Closer to Full Exit

as HPE

Q2 $0.38 $0.53 $0.60

Q3 $0.44 $0.54 $0.72 continues to delever following the Juniper acquisition, with net leverage

Q4 $0.62 $0.69 $0.75 exiting the Jan-qtr at 2.6x (down from 3.1x post Juniper close). HPE is

FY $1.94 $2.41 $2.71 targeting a net leverage ratio of ~2.0x by the end of FY27. Net/Net:

HPE’s partial H3C stake sale remains broadly in line with the company’s

previously announced monetization plan, with only modest changes to

1 Year Price History the buyer mix and transaction sequencing. The sale provides

incremental balance sheet flexibility as HPE continues to delever

following the Juniper acquisition, while the remaining H3C stake is still

expected to be sold to UNIS in H1:26. Maintain OP but raising our target

to $40 (15x our FY27 EPS estimate).

Announcement Details: Earlier today, HPE disclosed that it closed the

sale of a portion of its remaining H3C Technologies stake to seven

China-based buyers yesterday, including Unisplendour International

(UNIS), Beijing Xinhua Zhilian Equity Investment, China CITIC

Financial Asset Management, Shenzhen Zhaohua Information and

Communication Technology, Beijing Changshi Zhihua Equity

Investment, Hefei Huaxin Mingzhu Venture Capital Partnership, and

Source: FactSet Ningbo Yongning Yinshu VC Partnership, for total proceeds of

$986.8M. Following the transaction, HPE retains a smaller residual

ownership position in H3C (5.2%), which it expects to sell to UNIS in

H1:26 for $370.4M.

H3C History: HPE originally acquired the H3C asset through HP’s

acquisition of 3Com in 2010, with H3C serving as a China networking

and enterprise IT platform. In 2016, HPE created the new H3C entity

and sold a 51% controlling stake to an affiliate of Tsinghua Holdings /