Hewlett Packard Enterprise (HPE) will buy networking firm Juniper Networks in an all-cash transaction valued at $14 billion. The acquisition, set at $40.00 per share, marks a strategic initiative by HPE to fortify its position in the networking market and respond to the escalating demand for AI-native and hybrid cloud solutions.
The collaboration between HPE and Juniper is expected to reshape HPE’s portfolio, emphasising higher-growth solutions and strengthening its networking business. The acquisition is projected to double HPE’s networking business, creating a formidable force in the industry with a comprehensive portfolio that caters to the evolving needs of customers and partners.
This move is in response to the surge in demand for secure, unified technology solutions as businesses increasingly adopt AI and hybrid cloud-driven models. HPE has been strategically aligning its portfolio to capitalise on these trends, recognising networking as a pivotal component in addressing the transformative impact of AI and cloud technologies on businesses.
The combination of HPE and Juniper is anticipated to supercharge HPE’s edge-to-cloud strategy, positioning the merged entity as a leader in the AI-native environment built on a robust cloud-native architecture. Customers of all sizes are expected to benefit from a secure and comprehensive networking portfolio, simplifying connectivity needs in an era of expanding and complex demands.
Rami Rahim, the current CEO of Juniper Networks, will play a key role in leading the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.
“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,” said Neri.
He added, “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.”
Meanwhile, Rami Rahim, CEO of Juniper Networks, 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 maximises 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.”
The agreement has received unanimous approval from the Boards of Directors of both HPE and Juniper. Juniper shareholders are set to receive $40.00 per share in cash, representing a substantial premium of approximately 32 percent to Juniper’s unaffected closing stock price on January 8, 2024.
The transaction, expected to be funded through $14 billion in term loans initially, is subject to regulatory approvals, Juniper shareholder approval, and satisfaction of customary closing conditions. The completion of the acquisition is estimated to take place in late calendar year 2024 or early calendar year 2025.
In terms of financial projections, the HPE-Juniper combination aims to achieve operating efficiencies and run-rate annual cost synergies of $450 million within 36 months post-close. HPE plans to maintain its capital allocation policies, reducing leverage to approximately 2x within two years post-close. The company is committed to continuing its focus on innovation and go-to-market investments in its networking business after the acquisition, promising further developments in the networking space.
