Hewlett Packard Enterprise has decided to kick off 2024 with a major inorganic move. HPE and Juniper Networks announced a definitive agreement yesterday under which HPE will pay $40 per share for Juniper. It’s an all cash deal valued at $14B that will effectively double HPE’s networking business and possibly shift the balance of power in the vendor space.
Juniper has in recent years transitioned to a software footing, and lately that has taken them deep into the world of AI-native networks. HPE hopes to combine Juniper’s expertise in this area with its own networking business to create a next generation AI-focused networking vendor. Juniper CEO Rami Rahim will lead the combined HPE networking business, reporting to HPE’s overall President and CEO Antonio Neri.
HPE expects the deal to be accretive to non-GAAP EPS and free cash flow in its first year, post closing. That closing is expected to be about a year from now, in late Q4/2024 or early 2025. HPE expects to finance the deal via term loans, and will be looking to achieve $450M in run-rate annual cost synergies over a three year period – meaning about the start of 2028 I suppose.
We have seen AI become a driving force behind data center investment in recent years, and now it is a big part of this bit of consolidation among vendors. We might very well see other moves of this sort as vendors jockey for position to serve the rapidly evolving needs of infrastructure operators in this sector. But just what the best route is to that end is a subject of speculation as of yet I’d say.
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Categories: Artificial Intelligence · Mergers and Acquisitions · Telecom Equipment
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This sounds absolutely terrible for the marketplace.