Cloud and edge solutions provider Hewlett Packard Enterprise (HPE) has confirmed it has agreed a deal to acquire enterprise networking specialist Juniper Networks for $14 billion. The acquisition will double HPE’s networking business, increasing from around 18 percent of its total annual revenue to 31 percent, based on 2023 numbers; the combined networking business would represent more than 56 percent of HPE’s total operating income.
HPE called it an “important step” in its “portfolio shift towards higher-growth solutions and a higher-margin business”. It confirms its strategic pivot to make critical fixed and wireless networking integral to the sale of its traditional computing portfolio, as enterprises take advantage of developing artificial intelligence (AI) tools to drive digital change – “from edge to cloud to exascale”. It said the combined business will create a “new networking leader”.
The agreement has been approved by the boards of both firms. The transaction is expected to close in late 2024 or early 2025, subject to shareholder and regulatory approvals. The purchase price, of $14 billion, values Juniper at $40 per share, representing a premium of approximately 32 percent on Juniper’s closing price on January 8, the last full trading day prior to media reports regarding a possible transaction.
The pair expect to achieve joint operating efficiencies and cost synergies of $450 million per annum within 36 months of the deal’s close, they said in a statement. The transaction is expected to be accretive to non-GAAP EPS and free cash flow in the first year post close, they said. Rami Rahim, chief executive at Juniper Networks, will lead the combined HPE networking business, reporting to Antonio Neri, president and chief executive at HPE.
The big message is about smarter networking solutions to connect distributed computing infrastructure to drive a smarter economy; the watchword is AI, invariably. “Networking will become the new core business and architecture foundation for HPE’s hybrid cloud and AI solutions,” said HPE in a statement, also proclaiming their combined delivery of “next-generation AI-native networking and… digital experiences through secure, intelligent connectivity”.
HPE’s cloud platform, GreenLake, will house its integrated networking, computing, and analytics portfolio. HPE said: “AI and hybrid cloud… is accelerating demand for secure, unified technology solutions that connect, protect, and analyze companies’ data from edge to cloud. These trends… will be the most disruptive workloads for companies, and HPE has been aligning its portfolio to capitalize on [them] with networking as a critical connective component.”
They further outlined their portfolio crossover, citing a sweet spot between Juniper’s cloud-based Mist AI platform, offering enterprises smarter access to mission-critical hybrid-computing infrastructure, and HPE’s Aruba networking and AI “interconnect fabric” – as a means to “bring together… cloud-native and AI-native management and control to create a premier industry player that will accelerate innovation [in] modernized networking… for hybrid cloud and AI.”
HPE also said the deal will also create “meaningful opportunities” to cross-sell into Juniper’s base of enterprise customers, communication providers, and cloud customers. “It also grows Juniper’s footprint in data centers and cloud providers,” it noted. Despite the talk about a nw “networking leader”, HPE said it will continue its innovation and go-to-market investments in its networking business, as “one of its growth engines”.
Neri at HPE said: “HPE’s acquisition of Juniper represents an important inflection point in the industry and will change the dynamics in the networking market and provide customers and partners with a new alternative that meets their toughest demands. This transaction will strengthen HPE’s position at the nexus of accelerating macro-AI trends, expand our total addressable market, and drive further innovation for customers as we help bridge the AI-native and cloud-native worlds, while also generating significant value for shareholders. I am excited to welcome Juniper’s talented employees to our team as we bring together two companies with complementary portfolios and proven track records of driving innovation within the industry.”
Rahim at Juniper said: “Our multi-year focus on innovative, secure AI-native solutions has driven Juniper Networks’ outstanding performance. We have successfully delivered exceptional user experiences and simplified operations, and by joining HPE, I believe we can accelerate the next phase of our journey. In addition, this combination maximizes value for our shareholders through a meaningful all-cash premium. We look forward to working with the talented HPE team to drive innovation for enterprise, service provider and cloud customers across all domains, including campus, branch, data center and the wide area network.”
