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Investing.com -- Hewlett-Packard Enterprise (NYSE:HPE) and Juniper Networks (NYSE:JNPR) have reached a settlement with the U.S. Department of Justice (DOJ), clearing the way for their $14 billion merger, pending court approval.
Shares in HPE and Juniper soared around 6% and 8% in Monday premarket trading following the news, respectively.
To resolve antitrust concerns, HPE will sell its “Instant On” WLAN business within 180 days to a buyer approved by the DOJ. The sale includes all related assets, IP, staff, and customer contracts.
HPE will also auction a license to Juniper’s AI Ops for Mist source code, allowing competitors ongoing, non-exclusive access to maintain market competition in the WLAN space.
“While the details of the potential close date for the proposed transaction have yet to be announced, it is our sense that HPE is prepared to get the deal done as quickly as possible,” Bank of America analysts led by Wamsi Mohan said in a note.
“We view the settlement as a positive development, giving HPE the opportunity to drive higher growth and margin uplift through cross-selling opportunities and platform unification with JNPR,” they added.
The analysts view the potential Juniper acquisition as a catalyst for multiple expansion and long-term earnings accretion for HPE.
They believe the combined entity will be well-positioned to deliver an end-to-end networking and AI infrastructure stack, enhancing its competitiveness in AI-enabled datacenter and cloud-edge markets.
BofA reiterated a Buy rating on HPE stock and raised its price target from $20 to $23.
The bank sees the DOJ settlement terms as modest concessions that do not alter the strategic rationale of HPE’s acquisition of Juniper. HPE agreed to divest its Aruba Instant On WLAN business and auction two licenses for Juniper’s Mist AIOps source code.
According to BofA, the divestiture is limited in impact, given Juniper’s stronger position in the WLAN market, and the measures preserve HPE’s goals of strengthening its AI networking portfolio, expanding its enterprise reach, and boosting margins through AI-driven software.