HPE to Sell 49% Stake in H3C, Its Distributor of Servers and Storage in China

On a 8K SEC filing published on 05/26/23, Hewlett Packard Enterprise Company, wrote:

Entry into a Material Definitive Agreement.

On May 26, 2023, H3C Holdings Limited and Izar Holding Co. and together with H3C Holdings, each a wholly-owned subsidiary of Hewlett Packard Enterprise Company, entered into a Put Share Purchase Agreement with Unisplendour International Technology Limited (UNIS), a Hong Kong incorporated company and subsidiary of Unisplendour Corporation, an information technology services company, governing the sale of all of the shares of H3C Technologies Co., Limited held by the HPE Parties, which represent 49% of the total issued share capital of H3C.

The share purchase agreement was entered into pursuant to the terms of the shareholders’ agreement previously entered into between the parties as of May 1, 2016, as amended from time to time including, most recently, on October 28, 2022 and the notice that the HPE parties delivered to UNIS of the exercise of their right to put to UNIS, for cash consideration, all of the shares.

Pursuant to and subject to the terms and conditions of the share purchase agreement, the HPE parties shall sell to UNIS all of their shares, with full title and free from all encumbrances, for total cash consideration of $3.5 billion.

Pursuant to and subject to the terms and conditions of the share purchase agreement, the HPE parties and UNIS have agreed to various covenants and agreements, including, among other things:

(i) for UNIS to use its best endeavors to obtain all internal and external approvals, consents, and/or filings,

(ii) for UNIS to keep the HPE parties reasonably and timely informed of the status of such approvals, consents, and/or filings,

(iii) for the HPE parties to not unreasonably withhold or delay their approval or consent for any action taken by UNIS in connection with the transaction (including the financing of the transaction by UNIS), to the extent such approval or consent is required,

(iv) for the HPE parties to use their best efforts to provide all information and documentation reasonably requested by UNIS in connection with UNIS’ obtaining any consents, waivers, or approvals of any relevant governmental authority necessary to consummate the transaction,

(v) to cooperate in connection with any correspondence or interactions with government authorities in relation to the transaction,

(vi) arrangements governing the payment and disposition of dividends by H3C for the period between the signing of the share purchase agreement and the anticipated closing date of the Transaction, (vii) to cooperate in the event of a material adverse effect affecting H3C,

(viii) to provide reasonable assistance to each other for a period of 3 years after the consummation of the transaction with respect to regulatory inquiries, and

(ix) to continue performing the obligations, covenants, and undertakings under the shareholders’ agreement that also contains customary representations and warranties of each of UNIS and the HPE parties.

The obligations of the HPE parties, on the one hand, and UNIS, on the other hand, to effect the transaction are subject to the satisfaction or waiver of certain conditions, including:

(i) Unisplendour Corporation having obtained all necessary approvals from the applicable governmental authorities in the People’s Republic of China in connection with the transaction, including but not limited to approval of Unisplendour Corporation’s financing arrangement,

(ii) the clearance of the transaction, without any material qualification or imposition of any material additional requirement or amendment, by any and all relevant antitrust authorities,

(iii) the absence of any law or order that would prevent the transaction or the transactions contemplated by the share purchase agreement,

(iv) the approval of the transaction by Unisplendour Corporation’s stockholders,

(v) the accuracy of all parties’ representations and warranties; and

(vi) compliance by all parties with their respective covenants in the share purchase agreement in all material respects. Each party has agreed to use their best efforts to take all actions to ensure such conditions are satisfied and that the consummation of the transaction takes place within 180 calendar days following the date of signing of the share purchase agreement, provided that such time period shall be automatically extended by up to an additional 180 days in order to obtain the requisite approvals, if any. The put conditions period shall be subject to an additional extension of up to an additional 90 days if certain conditions are met under the share purchase agreement, or as otherwise agreed by the parties.

If UNIS defaults in making any payment when due pursuant to the terms of the share purchase agreement, it shall pay interest on such amount, such interest to accrue daily and compound monthly. The HPE parties must undertake all tax reporting obligations with the applicable tax authority in the People’s Republic of China.

The share purchase agreement contains termination rights for the HPE parties if any of the conditions in clauses (i) through (iv) in the 5th paragraph above are not satisfied or waived within (as applicable) the put conditions period.