Indications are that HP is ready to offload its PC business, but where could the potential buyer come from?
Despite market rumours to the contrary, Samsung has reiterated that it is not interested in buying HPs PC business. Samsung has the required deep pockets, but it lacks the desire to jump any deeper into the low margin PC business
The company has issued a statement on behalf of the CEO and Vice Chairman Geosung Choi: To put to rest any speculation on this issue, I would like to definitively state that Samsung Electronics will not acquire Hewlett-Packards PC Business. Hewlett-Packard is the global leader in the PC business with sales of 40 million units last year, while Samsung is an emerging player in the category and sold about 10 million units in 2010. Based on the significant disparity in scale with Samsungs own PC business and the complete lack of synergies, it would be both infeasible and imprudent to even consider such an acquisition.
Ever since HP indicated last week that it was exploring the idea of separating its PC business through a spin-off or other transaction, speculation has been rife about who might buy the PC unit. Some analysts have tipped Samsung as the top contender because it is being felt that HPs PC business is good for Samsung.
More importantly, Samsung has the financial muscle to execute such a deal. In November 2010, the company was ranked by Moody's Investors Service as Asia's second most cash-rich company, with a packed wallet of more than $18 billion. Other Asian firms, which could be the buyers of HPs PC arm, include the likes of Leonovo and Acer. But these two companies dont have deep pockets.
In its Q2 2011 report, Leonovo has declared that its cash reserve is $3.6 billion. Acers cash reserves are expected to be much less than that of Leonovos.