8-KMaterial Agreements

Hewlett Packard Enterprise Co 8-K Report, Material Agreement (May 24, 2024)

Filed May 24, 2024For Securities:HPEHPE-PC

Summary

Hewlett Packard Enterprise Company (HPE) has entered into an Amended and Restated Put Share Purchase Agreement (A&R SPA) and a Subsequent Arrangements Agreement, revising a previous agreement to sell its stake in H3C Technologies Co., Limited ('H3C'). The company will now sell 30% of H3C to Unisplendour International Technology Limited (UNIS) for approximately $2.1 billion by August 31, 2024. This restructured deal provides HPE with an option to sell its remaining 19% stake in H3C for an additional $1.4 billion at a later date, between 16 and 36 months after the initial sale closes. This filing signifies a significant step in HPE's divestment from its stake in H3C, a joint venture primarily focused on the Chinese market. The revised terms offer flexibility while securing substantial near-term proceeds. The transactions are subject to customary closing conditions, including necessary governmental and regulatory approvals in China, as well as UNIS shareholder approval. Investors should monitor the progress of these approvals and the timeline for the transaction's completion.

Key Highlights

  • 1HPE has amended its agreement to sell its stake in H3C, restructuring the deal to sell 30% initially for approximately $2.1 billion by August 31, 2024.
  • 2The revised agreement includes an option for HPE to sell its remaining 19% stake in H3C for approximately $1.4 billion at a later date (between 16-36 months post-initial close).
  • 3The initial sale of 30% is expected to be completed by August 31, 2024, with a grace period extending to October 21, 2024.
  • 4Key conditions for closing include obtaining necessary governmental and regulatory approvals in China, UNIS shareholder approval, and accuracy of representations and warranties.
  • 5Termination fees of 5% of the respective transaction consideration apply if the sale or option transaction does not close by their respective grace periods.
  • 6The A&R SPA and Subsequent Arrangements Agreement preserve HPE's ability to potentially sell its remaining stake to a third party if the option transaction with UNIS is not exercised or if the initial sale is significantly delayed.
  • 7HPE has engaged in, and expects to continue, other commercial dealings with H3C, UNIS, and Unisplendour Corporation in the ordinary course of business.

Frequently Asked Questions

The primary purpose of this filing is to announce that Hewlett Packard Enterprise Company (HPE) has entered into an Amended and Restated Put Share Purchase Agreement (A&R SPA) and a Subsequent Arrangements Agreement. These agreements modify the terms under which HPE will sell its stake in H3C Technologies Co., Limited (H3C) to Unisplendour International Technology Limited (UNIS).

The revised agreement allows HPE to sell 30% of H3C for approximately $2.1 billion by August 31, 2024. Additionally, it provides HPE with an option to sell its remaining 19% stake for an additional $1.4 billion at a later date. This structure allows HPE to realize significant cash proceeds in the near term while retaining an option for further proceeds.

The sale is subject to several conditions, including Unisplendour Corporation obtaining all necessary approvals from Chinese governmental authorities, approval from UNIS's stockholders, the absence of any prohibitive laws or orders, accuracy of representations and warranties, and compliance with covenants by both parties. These conditions are crucial for the transaction's completion.

If the initial sale (Sale Transaction) does not close by August 31, 2024 (with a grace period to October 21, 2024), UNIS agrees to waive its right of first offer on the remaining shares, and HPE would be entitled to sell all its H3C shares to a third party and could terminate the A&R SPA. If either the Sale Transaction or the Option Transaction does not close by their respective grace periods, UNIS will be obligated to pay HPE termination fees of 5% of the respective transaction consideration.