Hewlett Packard Enterprise and Juniper Networks (a leader in AI-native networks) announced that the companies have entered a definitive agreement under which HPE will buy Juniper in an all-cash transaction for $40 per share, representing an equity value of approximately $14 billion.
The combination of HPE and Juniper will advance HPE’s portfolio mix shift toward higher-growth solutions and strengthen its high-margin networking business, accelerating HPE’s sustainable, profitable growth strategy. The deal is expected to be accretive to non-GAAP EPS and free cash flow in the first year post-close.
The deal is expected to double HPE’s networking business, creating a new networking leader with a comprehensive portfolio that presents customers and partners with a compelling new choice to drive business value. And the rapid growth of AI and hybrid cloud-driven business is accelerating demand for secure, unified technology solutions that connect, protect, and analyze companies’ data from edge to cloud.
Combining HPE and Juniper’s portfolios supercharges HPE’s edge-to-cloud strategy with the ability to lead in an AI-native environment based on a foundational cloud-native architecture. HPE and Juniper will provide customers of all sizes with a complete and secure portfolio that enables the networking architecture necessary to manage and simplify their expanding and increasingly complex connectivity needs. The combined company is expected to use industry-leading AI to create better user and operator experiences, benefiting high-performance networks and cloud data centers for customers.
Through a suite of cloud-delivered networking solutions, software, and services, including the Mist AI and Cloud platform, Juniper empowers organizations to access the cloud infrastructure that is the foundation of digital and AI strategies securely and efficiently. The combination with HPE Aruba Networking and purposely designed HPE AI interconnect fabric will bring together enterprise reach and cloud-native and AI-native management and control to create a premier industry player that will accelerate innovation to deliver further modernized networking optimized for hybrid cloud and AI.
Upon completion of the deal, Juniper CEO Rami Rahim will lead the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.
Strategic Benefits
1.) Compelling pro forma financial profile – Along with the expected non-GAAP accretion, the combined company is expected to have attractive top and bottom-line growth opportunities immediately and in the long term.
2.) Positions HPE for long-term growth for shareholders and higher investment capacity – With Juniper, HPE’s portfolio will be weighted toward higher-growth and higher-margin businesses with large free cash flow potential, positioning HPE to enhance shareholder return and enabling additional investments in high-growth areas, such as AI and cloud. On a pro forma basis, the new networking segment will increase from about 18% of total HPE revenue as of fiscal year 2023 to approximately 31% and contribute more than 56%1, of HPE’s total operating income.
3.) Complementary capabilities to deliver next-gen AI-native networking and enable new digital experiences through secure and intelligent connectivity – Networking will become the new core business and architecture foundation for HPE’s Hybrid Cloud and AI solutions delivered through our HPE GreenLake hybrid cloud platform. And the combined company will offer secure and end-to-end AI-native solutions that are built on the foundation of cloud, high performance, and experience-first, and will also have the ability to collect, analyze, and act on aggregated telemetry across a broader installed base. This drives even better end-user experiences and streamlined network operations for our customers.
4.) Accelerates HPE’s strategic evolution and expands total addressable market – The deal increases the scope of HPE’s networking business and will create meaningful opportunities to provide even more comprehensive solutions to Juniper’s installed base of enterprise customers, communication service providers and tier-one cloud customers, and launches HPE into adjacent large segments, including data center networking, firewalls, and routers. It also grows Juniper’s footprint in data centers and cloud providers.
5.) The combination is expected to achieve operating efficiencies and run-rate annual cost synergies of $450 million within 36 months after the deal is closed. The strong growth in free cash flow along with maintenance of capital allocation policies are expected to provide sufficient room for reducing leverage to about 2x in two years post close. Following the deal’s completion, HPE will continue its innovation and go-to-market investments in its networking business, one of its growth engines.
KEY QUOTES:
“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.”
— HPE President and CEO Antonio Neri
“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.”
— Rami Rahim, CEO of Juniper Networks
