Hewlett Packard Enterprise (HPE) and Juniper Networks, Inc., have entered a definitive agreement under which HPE will acquire Juniper in an all-cash transaction for $40 per share, representing an equity value of approximately $14 billion.
The combination of HPE and Juniper advances HPE’s portfolio mix shift toward higher-growth solutions and strengthens its high-margin networking business, accelerating HPE’s sustainable profitable growth strategy. The transaction is expected to be accretive to non-GAAP earnings per share (EPS) and free cash flow in the first year post-close. The acquisition is expected to double HPE’s networking business, creating a new networking leader with a comprehensive portfolio that presents customers and partners with a compelling new choice to drive business value.
HPE and Juniper will together provide customers with a complete and secure portfolio that enables the networking architecture necessary to manage and simplify their expanding and increasingly complex connectivity needs. Leveraging industry-leading artificial intelligence (AI), the combined company is expected to create better user and operator experiences, benefitting customers’ high-performance networks and cloud data centres.
Upon completion of the transaction, Rami Rahim, chief executive officer (CEO), Juniper Networks, will lead the combined HPE networking business, reporting to Antonio Neri, president and CEO, HPE.
Commenting on the acquisition, Antonio Neri said, “HPE’s acquisition of Juniper represents an important inflection point in the industry and will change the dynamics in the networking market and provide customers and partners with a new alternative that meets their toughest demands. 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. I am excited to welcome Juniper’s talented employees to our team as we bring together two companies with complementary portfolios and proven track records of driving innovation within the industry.”
Meanwhile, Rami Rahim said, “Our multi-year focus on innovative secure AI-native solutions has driven Juniper Networks’ outstanding performance. We have successfully delivered exceptional user experiences and simplified operations, and by joining HPE, I believe we can accelerate the next phase of our journey. In addition, this combination maximises value for our shareholders through a meaningful all-cash premium. We look forward to working with the talented HPE team to drive innovation for enterprise, service provider and cloud customers across all domains, including campus, branch, data centre and the wide area network.”
Under the terms of the agreement, which has been unanimously approved by the boards of directors of HPE and Juniper, Juniper shareholders will receive $40.00 per share in cash upon the completion of the transaction. The transaction is expected to be funded based on financing commitments for $14 billion in term loans. Such financing will ultimately be replaced, in part, with a combination of new debt, mandatory convertible preferred securities, and cash on the balance sheet. The transaction is currently expected to close in late calendar year 2024 or early calendar year 2025, subject to receipt of regulatory approvals, approval of the transaction by Juniper shareholders, and satisfaction of other customary closing conditions.
The combination is expected to achieve operating efficiencies and run-rate annual cost synergies of $450 million within 36 months post-close. Strong growth in free cash flow, along with maintenance of capital allocation policies, are expected to provide sufficient room to reduce leverage to approximately 2 times in two years post-close. Following the completion of the transaction, HPE will continue its innovation and go-to-market investments in its networking business.
