8-KMaterial Agreements

Hewlett Packard Enterprise Co 8-K Report, Material Agreement (Nov 4, 2019)

Filed November 4, 2019For Securities:HPEHPE-PC

Summary

Hewlett Packard Enterprise Company (HPE) has filed an 8-K report announcing the termination of its Tax Matters Agreement with HP Inc. (HPI), originally established in 2015 following their separation. This termination, effective October 30, 2019, marks a significant step in disentangling the financial and tax obligations between the two entities that originated from the former Hewlett-Packard Company. The primary financial impact for HPE is a payment of $300 million from HPI, structured with an immediate payment of $200 million and subsequent payments of $50 million each in October 2020 and October 2021. This agreement also includes mutual releases of claims and liabilities related to the terminated Tax Matters Agreement, simplifying their post-separation relationship. Investors should view this as a move towards operational and financial clarity for HPE.

Key Highlights

  • 1HPE and HP Inc. have terminated their Tax Matters Agreement, effective October 30, 2019.
  • 2HP Inc. will pay HPE a total of $300 million in relation to the termination.
  • 3The payment from HP Inc. is structured as $200 million paid on or before October 31, 2019.
  • 4HP Inc. will make additional payments of $50 million on or before October 31, 2020, and $50 million on or before October 31, 2021.
  • 5The termination agreement includes a mutual release of certain claims and liabilities between HPE and HP Inc.
  • 6This action concludes the tax-related obligations stemming from the 2015 separation of HPE and HPI.

Frequently Asked Questions

The main purpose of this 8-K filing is to announce that Hewlett Packard Enterprise Company (HPE) has entered into an agreement with HP Inc. (HPI) to terminate their Tax Matters Agreement, which was established during their separation in 2015.

HP Inc. will pay HPE a total of $300 million. This payment is structured as $200 million paid by October 31, 2019, and two subsequent payments of $50 million each on or before October 31, 2020, and October 31, 2021. This provides HPE with a cash inflow and resolves past tax-related obligations.

The Tax Matters Agreement governed the tax responsibilities, tax attributes, and handling of tax matters between HPE and HPI following their separation. Its termination signifies a move to fully disentangle the financial and tax affairs of the two independent companies, bringing greater clarity and finality to their post-separation relationship.

The termination agreement includes a mutual release of certain claims and liabilities that arose from or were related to the terminated Tax Matters Agreement. This suggests that both parties are settling outstanding issues and moving forward without further claims related to the previous tax arrangement.