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Hewlett Packard Enterprise Company HPE confirmed that it entered a definitive agreement to acquire Juniper Networks, Inc. JNPR, a frontrunner in artificial intelligence (AI)-driven networking, for an all-cash transaction of $40.00 per share, totaling an equity value of approximately $14 billion. With this announcement, HPE put an end to all speculations hovering about a potential acquisition deal between the two companies.
The transaction, subject to regulatory approvals and customary closing conditions, is expected to close in late 2024 or early 2025 and is anticipated to be funded fully through a term loan. It’s slated to be accretive to HPE's non-GAAP EPS and free cash flow within the first year post-closure.
Additionally, the combined entity is anticipated to achieve operating efficiencies and run-rate annual cost synergies of $450 million within three years post-close. Moreover, the company expects to reduce leverage to approximately 2X in two years post-close through disciplined capital allocation policies.
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HPE to Fortify Networking Biz With JNPR Buyout
The acquisition deal underlines Hewlett Packard's relentless focus on fortifying its networking business, aligning with the burgeoning demand for high-growth solutions in the evolving tech landscape.
The acquisition aims to reshape Hewlett Packard’s portfolio mix by driving emphasis toward accelerated growth avenues, especially in networking, while reinforcing its high-margin business segments. This alignment will propel Hewlett Packard's trajectory toward sustainable and profitable growth, leveraging Juniper Networks' prowess in AI-native networks and significantly amplifying HPE's networking arm.
The combined entity is poised to set a new industry benchmark by offering an exhaustive portfolio. This alignment is not just a financial move but a strategic leap set to elevate HPE's competitive stance by expanding its networking domain, particularly in the realms of AI, cloud and hybrid solutions. The envisaged synergy projects Hewlett Packard’s networking business contribution to total revenues to reach 31% from 18% as of fiscal 2023 and contribute approximately 56% of its total operating income.
The demand surge for secure and efficient technological solutions is intensifying, fueled by the expansion of AI and hybrid cloud-driven operations. This acquisition is pivotal, positioning Hewlett Packard as a frontrunner in the AI-native environment, leveraging Juniper Networks’ cloud-native architecture to become an industry leader.