To improve its artificial intelligence (AI) products, Hewlett Packard Enterprise will acquire networking equipment manufacturer Juniper Networks for $14 billion in an all-cash transaction.
Juniper stockholders received an offer from HPE for $40 per share, the firms announced on Tuesday. That is a 32.4% premium over the closing price of the shares on Monday, the day the deal’s announcement was made public.
The acquisition is anticipated to quadruple HPE’s networking business at a time when the AI gold rush has prompted businesses to invest billions of dollars in modernizing and creating new products.
HPE is attempting to leverage Juniper’s products, including network security and AI-enabled enterprise networking operations (AIOps), to combat the slow demand it is seeing in its core server business.
Juniper has been hampered by weak demand from cable operators and wireless carriers who are struggling with inflation, as well as fierce rivalry in the networking market from Cisco Systems and Nvidia.
In extended trading following the bell, Juniper’s shares increased by 0.5%, while HPE’s remained essentially unchanged.
The companies stated that in the first year following completion, the purchase is anticipated to be accretive to HPE’s non-GAAP earnings and free cash flow.
Subject to regulatory clearances, the transaction is anticipated to occur in late 2024 or early 2025 and is planned to be financed by financing commitments for $14 billion in term loans.
HPE’s financial advisors include J.P. Morgan Securities LLC and Qatalyst Partners.
