HPE to acquire Juniper in a US$14 billion deal, positioning for the AI era

As generative AI is reshaping the technology industry, cloud and data center solution provider Hewlett Packard Enterprise (HPE) announced the acquisition of networking equipment company Juniper.

According to a statement on Businesswire, Juniper, a router and switch manufacturer, and HPE announced they had entered a definitive agreement under which HPE will acquire Juniper in an all-cash transaction for US$40 per share, representing an equity value of about US$14 billion. Juniper CEO Rami Rahim will lead the combined networking business, reporting to HPE CEO Antonio Neri.

The statement said that the collaboration between HPE and Juniper enhances HPE's offerings by leaning towards more rapidly growing solutions, reinforcing its profitable networking sector. This move will speed up HPE's strategy for sustained and profitable growth and double HPE's network business, creating a new networking leader.

Neri said that acquiring Juniper represents a significant inflection point in the industry, will change the dynamics in the networking market, and will provide customers and partners with a new alternative that meets their toughest demands. He further said the transaction would strengthen HPE's position at the nexus of accelerating macro-AI trends, expand its total addressable market, and drive further customer innovation by bridging the AI-native and cloud-native worlds.

The transaction agreement came as generative AI is reshaping the technological landscape. The statement mentioned that developments, including AI, will persist as the most impactful tasks for businesses, and HPE has been restructuring its products to seize the opportunities, adding that AI and hybrid cloud-centric businesses are accelerating the need for reliable, integrated tech solutions regarding companies' data from edge to cloud.

The funding for the transaction is anticipated to rely on a financing commitment of US$14 billion in term loans. The closure is projected for late 2024 or early 2025, pending regulatory approvals, consent from Juniper shareholders for the transaction, and fulfillment of other standard closing conditions.

Bloomberg Intelligence analyst Woo Jin Ho noted that HPE's acquisition of Juniper is poised to broaden its potential market scope, enhance its involvement in data center and cloud networks, bolster its long-term profit margin, and is forecasted to modestly contribute to earnings in the initial year.

Source: Bloomberg, January 2024

Source: Bloomberg, January 2024