Earlier this month, the European Commission approved unconditionally the proposed acquisition of Juniper Networks by HPE
The U.K. Competition and Markets Authority (CMA) gave Hewlett Packard Enterprise (HPE) the green light to move forward with the $14 billion acquisition of Juniper Networks, following European Commission (EC) approval last week.
In a brief statement, the CMA explained it had given its approval following an investigation into the proposed transaction which was launched in June, a process aimed at determining if the acquisition could negatively affect competition in the U.K. and other markets.
Earlier this month, the European Commission approved unconditionally the proposed acquisition of Juniper Networks by HPE, emphasizing that the transaction would raise no competition concerns in the European Economic Area (EEA).
HPE supplies IT infrastructure, related software and cloud solutions, while Juniper supplies networking, infrastructure and security solutions. In particular, concerning the horizontal overlaps between the companies’ activities in the market for WLAN equipment, WAPs and Ethernet campus switches, the European Commission found that in the EEA the merged entity’s market position would remain moderate and it would continue to face competition from a wide range of competitors, including strong established players on each of the markets.
HPE and Juniper are not each other’s closest competitors in the EEA market, the body concluded.
Concerning the conglomerate links between Juniper’s switches and HPE’s activities in the global markets for the supply of high-performance computing (HPC) systems and mid-range servers, the Commission found that in the EEA, the merged entity would not have the ability to engage in anticompetitive bundling or tying practices, given that the merged entity “would not have a significant degree of market power” either on the market for the supply of mid-range servers or on the market for the supply of HPC systems.
“Customers purchasing cycles for each of the respective products are different and therefore not conducive to allow any anticompetitive tying or bundling strategy by the merged entity. The merged entity would not obtain a significant advantage by offering its datacentre switches as a bundle with either HPE’s servers or HPE’s HPC systems,” the European body said.
“The Commission therefore concluded that the proposed merger would not raise competition concerns on any of the markets examined in the EEA or on any substantial part of it. It therefore cleared the transaction unconditionally,” it added.
In January, HPE confirmed it had agreed a deal to acquire Juniper Networks for $14 billion. The acquisition will double HPE’s networking business, increasing from around 18% of its total annual revenue to 31%, based on 2023 numbers; the combined networking business would represent more than 56% 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”.
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 pair expect to achieve joint operating efficiencies and cost synergies of $450 million per annum within 36 months of the deal’s close.
