Hewlett Packard Enterprise (HPE) and Juniper Networks, a leader in AI-native networks, entered into a definitive agreement for HPE to acquire Juniper in an all-cash transaction valued at $14 billion, or $40 per share.
The combination of HPE and Juniper is expected to advance HPE’s portfolio mix shift toward higher-growth solutions, strengthening its high-margin networking business and accelerating HPE’s sustainable profitable growth strategy. The transaction is expected to be accretive to non-GAAP EPS and free cash flow in the first year post close.
The move essnetially doubles 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. The explosion 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. These trends – and AI specifically – will continue to be the most disruptive workloads for companies. HPE has been aligning its portfolio to capitalize on these substantial IT trends with networking as a critical connective component.
Combining HPE and Juniper’s complementary portfolios supercharges HPE’s edge-to-cloud strategy with an ability to lead in an AI-native environment based on a foundational cloud-native architecture. Together, HPE and Juniper will provide customers of all sizes with a complete, secure portfolio that enables the networking architecture necessary to manage and simplify their expanding and increasingly complex connectivity needs. Leveraging industry-leading AI, the combined company is expected to create better user and operator experiences, benefitting customers’ high-performance networks and cloud data centers.
Through its suite of cloud-delivered networking solutions, software and services – including the Mist AI and Cloud platform – Juniper helps organizations access mission-critical cloud infrastructure that serves as the foundation of digital and AI strategies. 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.
Juniper’s CEO, Rami Rahim will lead the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.
“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.”
“Our multi-year focus on innovative secure AI-native solutions has driven Juniper Networks’ outstanding performance,” added Rahim. “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.”
Compelling pro forma financial profile. In addition to 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.
The combination is expected to achieve operating efficiencies and run-rate annual cost synergies of $450 million within 36 months, post close. Strong growth in free cash flow, along with maintenance of capital allocation policies, are expected to provide sufficient room to reduce leverage to approximately 2x in two years post close. Following the completion of the transaction, HPE will continue its innovation and go-to-market investments in its networking business, one of its growth engines.