HPE to acquire Juniper Networks in $14bn AI deal
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Hewlett Packard Enterprise is to buy Juniper Networks in a $14bn deal to boost AI in networking.
The agreed $14bn all cash deal will see HPE pay $40.00 for each Juniper share, doubles the size of its networking business (see below) and boosts its profitability significantly.
HPE says the deal will create a new networking leader to address the explosion of AI and hybrid cloud-driven business. AI specifically will continue to be the most disruptive workloads for companies and HPE says it has been aligning its portfolio to capitalize on this. It takes HPE into adjacent large segments, including data centre networking, firewalls and routers and also grows Juniper’s footprint in data centres and cloud providers alongside HPE servers.
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Upon completion of the deal, Juniper CEO Rami Rahim will lead the combined HPE networking business, reporting to HPE President and CEO Antonio Neri. The new networking segment will increase from approximately 18% of total HPE revenues of $29.1bn in 2023 to approximately 31% and contribute more than 56% of HPE’s total operating income.
This would put the networking business at $5.23bn in 2023, which would be combined with $5.65bn at Juniper to create a business with $10.88bn. In contrast Cisco has a revenue of $57bn, which was up 11% in 2023.
HPE is one of the top ten semiconductor buyers and the deal with Juniper will boost its buying power with key networking supplier Broadcom, and the company expects the deal to yield cost savings of $450 million in the first three years. It will also provide access to Juniper’s OpenLight photonic networking joint venture with Synopsys, the networking switch technology developed by Aruba and the supercomputer networking technology developed by Gnodal as part of the acquisition of Cray.
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“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.
“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.”
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“Our multi-year focus on innovative, secure AI-native solutions has driven Juniper Networks’ outstanding performance,” said Rami Rahim, CEO of Juniper Networks. “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 centre and the wide area network.”
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The transaction is currently expected to close in late calendar year 2024 or early calendar year 2025, subject to receipt of regulatory approvals and approval of the transaction by Juniper shareholders. Following the completion of the transaction, HPE says it will continue investments in its networking business which it sees as one of its growth engines.
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