HP confirms plan to spin off PCs and printers from enterprise products to form two separate companies

HP resurrects rejected Léo Apotheker plan from 2011 to split company in two

HP has confirmed plans to split the company into two - similar to plans first put forward by ousted CEO Léo Apotheker in 2011 - with the PC and printer businesses bundled together in one unit, and the enterprise products and services in another.

The two companies will have similar turnovers of around $57bn, and the bundling of the profitable printers division with PCs will ensure that the spun-out company has some value.

In a statement confirming earlier media speculation, the company said: "HP [has] announced plans to separate into two new publicly traded Fortune 50 companies: one comprising HP's market-leading enterprise technology infrastructure, software and services businesses, which will do business as Hewlett-Packard Enterprise, and one that will comprise HP's market-leading personal systems and printing businesses, which will do business as HP Inc and retain the current logo.

"The decision to separate into two market-leading companies will provide each new company with enhanced independence, focus, financial resources, and flexibility to adapt quickly to market and customer dynamics, while generating long-term value for shareholders."

In a statement, the company claimed that the plan would be in the best interests of both "halves" of the company.

"Both companies will be well capitalised and expect to have investment grade credit ratings and capital structures optimised 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, and investors with the opportunity to invest in two companies with compelling and unique financial profiles well suited to their respective businesses."

Meg Whitman will become president and CEO of HP Enterprise, with Pat Russo becoming board chairman. Dion Weisler, meanwhile, will become president and CEO of HP Inc, the PC and printer business, while Meg Whitman will become chairman of the board.

Whitman claimed that the split formed part of year four of her five-year turnaround plan for the company.

"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 Whitman.

She continued: "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."

Back in 2011, just before Apotheker was ousted, the former CEO planned to sell-off the PC and printer businesses. Whitman, in contrast, will give shareholders in HP a stake in both businesses.