Personal computer and printer maker HP will bolster its peripherals business with its $3.3 billion acquisition of enterprise headset maker Poly. HPQ stock dipped on the news Monday while POLY stock rocketed.
Palo Alto, Calif.-based HP announced early Monday that it plans to buy Santa Cruz, Calif.-based Poly in an all-cash transaction for $40 per share. The companies expect the deal to close by the end of 2022.
The deal is a play on the growth of hybrid work solutions following the Covid-19 pandemic. With more workers now opting for a mix of home office and corporate office hours, they're outfitting both locations with tech gear.
"The rise of the hybrid office creates a once-in-a-generation opportunity to redefine the way work gets done," HP Chief Executive Enrique Lores said in a news release. "Combining HP and Poly creates a leading portfolio of hybrid work solutions across large and growing markets."
Hybrid Office Market Growing
Poly, formed by the merger of Plantronics and Polycom in 2018, makes audio and videoconferencing systems. Its products include headsets, cameras, and communications software.
About 75% of office workers are investing to improve their home setups to support new ways of working, HP said, citing a proprietary survey. Traditional office spaces are also being reconfigured to support hybrid work and collaboration, with a focus on meeting room solutions, HP said.
Peripherals represent a $110 billion opportunity that is growing 9% annually, HP said.
Meanwhile, workforce solutions represent a $120 billion opportunity that is growing 8% annually, as companies invest in digital services to set up, manage, and secure more distributed IT ecosystems.
HPQ Stock Dips, POLY Stock Soars
On the stock market today, HPQ stock fell 2.7% to close at 38.75.
On Friday, HPQ stock hit an all-time high 39.84. Earlier in the session Friday, HPQ stock broke out of a double-bottom base at a buy point of 39.17, according to IBD MarketSmith charts. But trading volume was slightly below normal, a sign that the breakout lacked conviction.
Meanwhile POLY stock rocketed 52.6% to 39.99 on Monday.
In a note to clients, Wells Fargo analyst Aaron Rakers said HP's purchase of Poly makes strategic sense. He rates HPQ stock as equal weight, or neutral.
Evercore ISI analyst Amit Daryanani reiterated his outperform rating on HPQ stock with a price target of 43.
"Overall, we think this is a logical and synergistic combination from a cross-selling opportunity as well as a supply chain perspective," Daryanani said in a note to clients.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
