HP plans to separate into two new publicly traded companies, separating the enterprise business from the consumer business, as the company approaches the fourth year of corporate restructuring under its latest CEO Meg Whitman. Under the terms of the separation, HP’s enterprise technology infrastructure, software and services businesses will do business as Hewlett-Packard Enterprise; while HP’s personal systems and printing businesses, will do business as HP Inc. and retain the current logo. The transaction is expected to be completed by the end of fiscal 2015.
Meg Whitman (Chairman, president and CEO, HP): The decision to separate into two market-leading companies underscores our commitment to the turnaround plan. It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders. In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders.
Meg Whitman, president and CEO of HP, and Cathie Lesjak, CFO of HP, will hold these positions with Hewlett-Packard Enterprise. When the separation is complete, Ms. Whitman will also serve on the board of directors of Hewlett-Packard Enterprise. Pat Russo will move from lead independent director of HP to chairman of Hewlett-Packard Enterprise. Dion Weisler, executive vice president of HP’s Printing and Personal Systems business, will lead HP Inc. as president and CEO. Ms. Whitman will serve as non-executive chairman of HP Inc.’s board.
Hewlett-Packard Enterprise will focus on technology infrastructure, software and services,offering solutions in the cloud, big data, security and mobility space. The company intends for HP Financial Services to continue to provide financing for customers and partners of HP Inc, as well as its enterprise customers. The separation, among other things, is expected to provide additional resources, and a reduction of debt at the operating company level, to support investments across key areas of the portfolio, says HP.
HP Inc. will operate in the personal systems and printing markets space. The new company’s profitability and free cash flow will enable investments in growth markets such as 3-D printing and new computing experiences, says HP.
Goldman Sachs is serving as financial advisor and Wachtell, Lipton, Rosen and Katz is serving as legal advisor to HP.
HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc. The transaction is intended to be tax-free to HP’s shareholders for federal income tax purposes.
[Image courtesy: HP]