HP Enterprise Investors: You're About To Get A $2 Billion Buyback

Macquarie’s Rajesh Ghai reiterated an Outperform rating on Hewlett Packard Enterprise Co (NYSE: HPE), with a price target of $22.

$2 Billion In Proceeds

Ghai mentioned the company had announced “Tsinghua's subsidiary Unisplendour had received approval from the Chinese Securities Regulatory Commission to move forward with its partnership with HPE in China.”

The analyst believes this regulatory approval was a crucial step in the successful closure of the transaction, which would lead to the creation of a subsidiary H3C in China. Hewlett Packard will own 49 percent stake in the subsidiary.

Aggressive Share Buyback

The company would receive more than $2 billion in proceeds from the deal, which is expected to be used for share buybacks.

Ghai believes that “the sale of the H3C stake will make HPE’s capital return program even more aggressive.”

In addition, the pending sale of its stake in MphasiS to Blackstone Group LP (NYSE: BX) is expected to lead to proceeds of $940 million, which is also likely to be used for share buybacks.