HP’s $1.1 billion Acquisition of Samsung Printer Business Receives China’s Approval

HP Inc. acquisition of Samsung printer business for $1.1 billion receives approval from the Ministry of Commerce in China. In the third-quarter of 2016, HP had announced the acquisition and expected to complete the switch over by 2017 end. The Chinese government had cited concerns over the acquisition due to HP, a USA-based company, dominance in the domestic laser print market.

The Ministry of Commerce has approved the acquisition almost a year later, pending regulation review, with certain conditions. The major condition remains that HP should sell its A4 format laser printers in China in “fair and reasonable” terms and they have to report the prices and relevant industry data to the Ministry every six months. The Ministry of Commerce also announced that the HP would not be authorized to buy any stake, even a minority equity investment, in other A4 printer manufacturing companies based in China. HP will not be allowed to restrict the compatibility of its printers with third-party vendors and neither engage in advertisements claiming the incompatibility between HP printers and other suppliers. Violation of any of the terms could jeopardize the presence of HP in the Chinese market.

Post the acquisition, which is expected to conclude by 31 December 2017, HP will inherit around 6,000 employees of which 1,000 are in sales and support, 2,000 are in research, and the remaining are in service and manufacturing. The engineers and researchers hold expertise in imaging electronics, printer technology, and printer suppliers. The acquisition gives HP a major share in the Asian printing market, and it will also receive 6,500 printing technology patents of Samsung. The acquisition is crucial for HP as it attempts to enter the copier machine market and it opens up the $55 billion market opportunity for superior multifunction printer (MFP) technology.

Samsung was not available to comment on the development. While Samsung had announced their prioritization of selling printers and printing services in 2013, stiff competition from rivals such as Canon, Epson and HP made the mobile giant to reconsider its decision. The acquisition is Samsung’s strategy to overhaul its divestiture and focus on television, core smartphone, and memory chip businesses.