HP to Split, Forming Two Separate Companies
PALO ALTO, CA—HP announced plans to separate into two new publicly traded Fortune 50 companies: one comprising HP’s enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise; and one that will comprise HP’s personal systems and printing businesses, which will do business as HP Inc. and retain the current logo.
Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, 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.
The move comes as HP approaches the fourth year of its five-year turnaround plan. During this time, the company believes it has executed successfully against its turnaround objectives, keeping customers and partners at the forefront. The company feels it is now positioned to accelerate performance, drive sustained growth and demonstrate industry leadership in key areas.
“Our work during the past three years has significantly strengthened our core businesses to the point where we can more aggressively go after the opportunities created by a rapidly changing market,” said Meg Whitman, chairman, president and CEO of 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.”
Both companies will be well capitalized and expect to have investment grade credit ratings and capital structures optimized to reflect their distinct growth opportunities and cash flow profiles. The separation into independent, publicly traded companies will provide each company with its own, more focused equity currency.
Whitman and Cathie Lesjak, CFO of HP, will hold these positions with Hewlett-Packard Enterprise. When the separation is complete, Whitman will also serve on the board of directors of Hewlett-Packard Enterprise, and 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. Whitman will serve as non-executive chairman of HP Inc.’s board of directors.