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Hewlett Packard (HPE) Confirms Buying Juniper Networks for $14B
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Hewlett Packard Enterprise Company (HPE - Free Report) confirmed that it entered a definitive agreement to acquire Juniper Networks, Inc. (JNPR - Free Report) , a frontrunner in artificial intelligence (AI)-driven networking, for an all-cash transaction of $40.00 per share, totaling an equity value of approximately $14 billion. With this announcement, HPE put an end to all speculations hovering about a potential acquisition deal between the two companies.
The transaction, subject to regulatory approvals and customary closing conditions, is expected to close in late 2024 or early 2025 and is anticipated to be funded fully through a term loan. It’s slated to be accretive to HPE's non-GAAP EPS and free cash flow within the first year post-closure.
Additionally, the combined entity is anticipated to achieve operating efficiencies and run-rate annual cost synergies of $450 million within three years post-close. Moreover, the company expects to reduce leverage to approximately 2X in two years post-close through disciplined capital allocation policies.
Hewlett Packard Enterprise Company Price and Consensus
The acquisition deal underlines Hewlett Packard's relentless focus on fortifying its networking business, aligning with the burgeoning demand for high-growth solutions in the evolving tech landscape.
The acquisition aims to reshape Hewlett Packard’s portfolio mix by driving emphasis toward accelerated growth avenues, especially in networking, while reinforcing its high-margin business segments. This alignment will propel Hewlett Packard's trajectory toward sustainable and profitable growth, leveraging Juniper Networks' prowess in AI-native networks and significantly amplifying HPE's networking arm.
The combined entity is poised to set a new industry benchmark by offering an exhaustive portfolio. This alignment is not just a financial move but a strategic leap set to elevate HPE's competitive stance by expanding its networking domain, particularly in the realms of AI, cloud and hybrid solutions. The envisaged synergy projects Hewlett Packard’s networking business contribution to total revenues to reach 31% from 18% as of fiscal 2023 and contribute approximately 56% of its total operating income.
The demand surge for secure and efficient technological solutions is intensifying, fueled by the expansion of AI and hybrid cloud-driven operations. This acquisition is pivotal, positioning Hewlett Packard as a frontrunner in the AI-native environment, leveraging Juniper Networks’ cloud-native architecture to become an industry leader.
With Juniper Networks' suite of cloud-delivered networking solutions, including the Mist AI and Cloud platform, this acquisition fortifies Hewlett Packard’s arsenal, synergizing with HPE's Aruba Networking and AI-driven interconnect fabric. This amalgamation is anticipated to revolutionize enterprise networking, customizing it for enhanced hybrid cloud and AI applications.
Post-acquisition, Rami Rahim, the CEO of Juniper Networks, will spearhead the integrated HPE networking business, reporting to Antonio Neri, the president and CEO of HPE.
This strategic move exemplifies HPE's commitment to capitalizing on transformative technology trends. By focusing on networking, HPE aims to bridge the gap between AI-native and cloud-native domains, offering customers pioneering solutions that anticipate the evolving needs of the digital era.
First Big Tech Deal in 2024
The acquisition agreement between Hewlett Packard and Juniper Networks marks the first big tech merger and acquisition (M&A) deal for the year after a lackluster 2023 for M&A activities, according to a Bloomberg report. The financial news and data provider pointed out that M&A deals in 2023 fell to $2.17 trillion from a record of $3.82 trillion in 2021.
The acquisition news came just a few days after the technology sector heard the speculation of Synopsys Inc. (SNPS - Free Report) acquiring ANSYS Inc. (ANSS - Free Report) . Last Friday, Bloomberg reported that Synopsys is in advanced talks to buy ANSYS for an estimated value of $35 billion. The financial news and data provider’s sources suggest that Synopsys is considering paying $400 for each ANSYS share.
The envisioned merger between Synopsys and ANSYS holds prospects for both entities. Synopsys specializes in electronic design automation software, catering to the semiconductor and electronics industries. Conversely, ANSYS is renowned for developing and globally marketing engineering simulation software and services widely used across a spectrum of industries and academia.
Currently, Juniper Networks carries a Zacks Rank #2 (Buy), while Hewlett Packard and Synopsys each carry a Zacks Rank #3 (Hold). ANSYS has a Zacks Rank #4 (Sell).
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Hewlett Packard (HPE) Confirms Buying Juniper Networks for $14B
Hewlett Packard Enterprise Company (HPE - Free Report) confirmed that it entered a definitive agreement to acquire Juniper Networks, Inc. (JNPR - Free Report) , a frontrunner in artificial intelligence (AI)-driven networking, for an all-cash transaction of $40.00 per share, totaling an equity value of approximately $14 billion. With this announcement, HPE put an end to all speculations hovering about a potential acquisition deal between the two companies.
The transaction, subject to regulatory approvals and customary closing conditions, is expected to close in late 2024 or early 2025 and is anticipated to be funded fully through a term loan. It’s slated to be accretive to HPE's non-GAAP EPS and free cash flow within the first year post-closure.
Additionally, the combined entity is anticipated to achieve operating efficiencies and run-rate annual cost synergies of $450 million within three years post-close. Moreover, the company expects to reduce leverage to approximately 2X in two years post-close through disciplined capital allocation policies.
Hewlett Packard Enterprise Company Price and Consensus
Hewlett Packard Enterprise Company price-consensus-chart | Hewlett Packard Enterprise Company Quote
HPE to Fortify Networking Biz With JNPR Buyout
The acquisition deal underlines Hewlett Packard's relentless focus on fortifying its networking business, aligning with the burgeoning demand for high-growth solutions in the evolving tech landscape.
The acquisition aims to reshape Hewlett Packard’s portfolio mix by driving emphasis toward accelerated growth avenues, especially in networking, while reinforcing its high-margin business segments. This alignment will propel Hewlett Packard's trajectory toward sustainable and profitable growth, leveraging Juniper Networks' prowess in AI-native networks and significantly amplifying HPE's networking arm.
The combined entity is poised to set a new industry benchmark by offering an exhaustive portfolio. This alignment is not just a financial move but a strategic leap set to elevate HPE's competitive stance by expanding its networking domain, particularly in the realms of AI, cloud and hybrid solutions. The envisaged synergy projects Hewlett Packard’s networking business contribution to total revenues to reach 31% from 18% as of fiscal 2023 and contribute approximately 56% of its total operating income.
The demand surge for secure and efficient technological solutions is intensifying, fueled by the expansion of AI and hybrid cloud-driven operations. This acquisition is pivotal, positioning Hewlett Packard as a frontrunner in the AI-native environment, leveraging Juniper Networks’ cloud-native architecture to become an industry leader.
With Juniper Networks' suite of cloud-delivered networking solutions, including the Mist AI and Cloud platform, this acquisition fortifies Hewlett Packard’s arsenal, synergizing with HPE's Aruba Networking and AI-driven interconnect fabric. This amalgamation is anticipated to revolutionize enterprise networking, customizing it for enhanced hybrid cloud and AI applications.
Post-acquisition, Rami Rahim, the CEO of Juniper Networks, will spearhead the integrated HPE networking business, reporting to Antonio Neri, the president and CEO of HPE.
This strategic move exemplifies HPE's commitment to capitalizing on transformative technology trends. By focusing on networking, HPE aims to bridge the gap between AI-native and cloud-native domains, offering customers pioneering solutions that anticipate the evolving needs of the digital era.
First Big Tech Deal in 2024
The acquisition agreement between Hewlett Packard and Juniper Networks marks the first big tech merger and acquisition (M&A) deal for the year after a lackluster 2023 for M&A activities, according to a Bloomberg report. The financial news and data provider pointed out that M&A deals in 2023 fell to $2.17 trillion from a record of $3.82 trillion in 2021.
The acquisition news came just a few days after the technology sector heard the speculation of Synopsys Inc. (SNPS - Free Report) acquiring ANSYS Inc. (ANSS - Free Report) . Last Friday, Bloomberg reported that Synopsys is in advanced talks to buy ANSYS for an estimated value of $35 billion. The financial news and data provider’s sources suggest that Synopsys is considering paying $400 for each ANSYS share.
The envisioned merger between Synopsys and ANSYS holds prospects for both entities. Synopsys specializes in electronic design automation software, catering to the semiconductor and electronics industries. Conversely, ANSYS is renowned for developing and globally marketing engineering simulation software and services widely used across a spectrum of industries and academia.
Currently, Juniper Networks carries a Zacks Rank #2 (Buy), while Hewlett Packard and Synopsys each carry a Zacks Rank #3 (Hold). ANSYS has a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.