Hewlett Packard Enterprises (HPE) -) said Tuesday it has entered into a definitive agreement to acquire Juniper Networks, the cloud and artificial intelligence networking company, in an all-cash transaction worth about $14 billion, or $40 per share.
HPE said in a statement that the move is expected to double its networking business amid rapidly accelerating demand for AI and cloud-driven solutions.
Juniper CEO Rami Rahim will lead HPE's networking business assuming the transaction goes through successfully.
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Juniper's stock ended 2023 at a price per share of roughly $30. HPE said the deal would grant Juniper shareholders a 32% premium. Shares of Juniper, which has a market cap of around $12 billion, spiked nearly 2% following market open Wednesday, briefly hitting a new 52-week high of $37.60.
Juniper, which was founded in 1996, sells IT networking gear, including routers, with a focus on network security. The company brought in $1.4 billion in revenue during its most recent quarter, earning $76 million in profit.
The deal, according to HPE, is expected to close later in 2024 or in early 2025. It has already been unanimously approved by the boards of both companies, though has not yet been approved by Juniper shareholders.
“Our multi-year focus on innovative, secure AI-native solutions has driven Juniper Networks’ outstanding performance,” Rahim said in a statement. “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."
He added that the transaction "maximized value" for Juniper shareholders.
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HPE expects the resulting company, post-transaction, to have "attractive top-and bottom-line growth opportunities immediately and in the long-term."
HPE said it will be better able to invest more in AI and cloud-related businesses following the conclusion of the transaction. The company expects its networking segment to increase from generating 18% of total HPE revenue in 2023 to 31%, contributing more than 56% of the company's total operating income.
HPE said that joining up with Juniper will additionally lead to annual cost savings of $450 million within three years of completing the transaction.
“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.” HPE President and CEO Antonio Neri said in a statement.
Shares of HPE, which has a $30 billion market cap, rose slightly Wednesday morning.
The company first boosted its networking focus with a 2015 acquisition of Aruba Networks that followed a bit of an internal corporate divorce. In 2014, Hewlett-Packard announced that it was splitting into two entities, with HPE leading its software and services and HP Inc. continuing to sell computers and printers.
HPE has an average analyst price target of $18.08, according to TipRanks, with an average "moderate buy" rating.
Contact Ian with AI stories via email, ian.krietzberg@thearenagroup.net, or Signal 732-804-1223.
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