Hewlett Packard Enterprise (NYSE:HPE) and Juniper Networks (NYSE:JNPR) have finalized a merger agreement in an all-cash deal valued at $14 billion, with each share priced at $40.00.
This strategic move enhances HPE's portfolio by shifting towards higher-growth solutions and fortifying its high-margin networking sector, aligning with its sustainable profitable growth strategy, the company said in a press release.
HPE stock fell 8.9% yesterday on rumors about the deal while JNPR shares rose 21.8%.
The acquisition is anticipated to double HPE's networking business, establishing a new leader in the field with an extensive portfolio. The transaction is expected to bolster non-GAAP EPS and free cash flow within the first year.
Post-closure, Juniper CEO Rami Rahim is set to lead the combined HPE networking business, reporting to HPE President and CEO Antonio 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,” Neri said.
Analysts weighed in positively on the deal.
“The $14B price tag values Juniper around 2.5x Sales and ~17x FTM P/E – reasonable in our opinion though clearly the multiples are lower post synergy. Fundamentally, we think networking is likely to remain more muted through CY24 as JNPR and others go through some period of inventory digestion and backlog normalization,” analysts wrote in a note.
“Structurally, we think JNPR’s enterprise segment (MIST) remains well positioned to disrupt the campus market over the next several years. A dynamic that we think HPE’s sales and GTM scale can help accelerate.”