Update on the HPE acquisition of Juniper Networks
This is the week of the HPE Discover 2024 conference. It also marks the first time a tech company hosts their keynote and customer event at the famed Sphere in Las Vegas.
While the Sphere is a great marketing distraction, let’s talk about what might be the largest elephant in the room this may receive little attention – the Juniper Networks acquisition.
Way back in the ancient scrolls of January 9th, 2024, HPE Aruba Networks (yes, the one with the palm trees) declared its love for Juniper. They wanted to accelerate AI-driven innovation, so, they whipped out their wallets and said, “Juniper, let’s tango—all cash, $40 per share.” The equity value? A cool $14B. Business must be booming on the island of sunsets and Wi-Fi waves.
Some have joked that HPE is where companies go to die, but the standing in stark contrast to this myth is the major recent acquisition in which HPE acquired Aruba Networks and the culture lives on strong in the heart of Airheads who are now keen to welcome and accelerate their AI-drive strategy!! Not to mention, Aruba Networks has been a huge cash cow for HPE. While HPE and Juniper have shone a very bright light on the business and technical benefits that could result from the merger, others, such as Lee Badman have written about the potential pains that could result.
It was stated that the deal would take approximately 1 year to complete the steps and officially close – expecting the deal to close late calendar year 2024 or early 2025. As is customary, both HPE and Juniper and directed by their legal teams not to make any statements around the changes in the merged organization, or any product and strategy as a result of the acquisition. Basically, legal guidance to go on radio silence and if anyone asks, say that one cannot legally speak about these topics.
Unfortunately, business these days is measured in quarterly performance and sometimes even shorter intervals. The uncertainty looming in the air for a year affords competitors to HPE & Juniper ample time to seem fear, uncertainty, and doubt in the minds of new and existing customer. With the legal gag order, some have described the silence from HPE and Juniper on this acquisition is deafening.
Is it really deafening or have we just grown impatient. HPE and Juniper provided a list of milestones that needed to be reached before the deal could be completed. Let’s review some of these milestones, which are required in all acquisitions of similar magnitude.
1. Shareholders approval – Shareholders of the target company typically need to approve the acquisition. Their preferences matter, especially institutional shareholders who often prefer cash deals. Taking care not to hold the vote on April 1, Juniper Networks shareholders overwhelming voted in favour of the deal on April 2, 2024. Over 99% of shareholders were in favour of the deal.
2. Financial Backing – Shockingly, in order to close the deal, the acquiring company must have the promised funds – meaning HPE has to come up with $14B in cash. There is a reason why we call them business leaders. Under the direction of Antonio Neri, HPE has secured the required funding to close the acquisition of Juniper Networks. The financing is being provided by Citigroup Global Markets Inc., JPMorgan Chase Bank N.A. and Mizuho Bank Ltd.
3. Regulatory Approval – it’s like getting a permission slip for the corporate playground. Each region has its own rulebook, complete with chapters on competition, security, and “Don’t Be a Monopoly 101.” So, what’s the deal? While this deal does combine two competitors into one, the combined company will still be smaller than their largest competitor with many other companies able to compete in smaller spaces as best of breed solutions. Brazil has already announced their regulatory approval of the acquisition; however we are waiting on larger regions like the US and EU to announce their respective regulatory approval.
Regulatory approval from the US and EU is anticipated over the next 6 months and will mark the final major milestone towards closing the deal. Brazil knows that combining two competitors doesn’t create a Godzilla: it’s more like a tech gecko. The combined company will still be David next to Goliath. Once the deal closes and the two companies forged together, a funnel of excitement will erupt with AI-driven insights and operational wonders. (Update: The UK has just initiated its formal review).
The deal is moving forward in the time that was expected and there are not expected to be any hurdles that would prevent the deal from closing. Once complete, Juniper Networks will become part of the HPE Networking division with Juniper CEO – Rami Rahim, leading up the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.
Until then, it’s business as usual for these two companies. As a reminder for those at HPE Discover this week. There are limited number of custom pieces and accessories that can only be purchased exclusively HPE Discover 2024 in the Elemental Goods shop. So, grab your “HPE Aruba Networking” swag before it’s gone.
Slàinte!
Resources
HPE announces acquisition of Juniper Networks
Juniper Networks announces acquisition by HPE
Juniper Shareholder vote in favour to be acquired by HPE
HPE secures funding for Juniper Networks acquisition
Brazil approvals regulatory HPE acquisition of Juniper Networks
https://mlexmarketinsight.com/news/insight/hpe-juniper-deal-gets-unconditional-clearance-in-brazil
UK regulator (CMA) set to probe HPE’s $14B Juniper Network acquisition
https://www.techradar.com/pro/uk-regulator-set-to-probe-hpes-dollar14bn-juniper-networks-acquisition