Was HPE’s $14B Juniper acquisition a sensible transfer?

When HPE introduced its intention to purchase Juniper Networks for $14 billion in chilly, arduous money earlier this month, it was a little bit of a shock. Positive, HP had already purchased Aruba in 2015 for round $3 billion. Grabbing one other networking firm would presumably simply add one other layer to that enterprise. In fact, there are at all times issues incorporating one massive group into one other, and HP doesn’t precisely have the most effective document for being a clean operator the place that’s involved over time.

However surprisingly, the businesses didn’t place this aware coupling as a pure networking play. In truth, in a weblog submit asserting the deal, Juniper CEO Rami Rahim urged it was extra about AI. “This mixture with HPE is predicted to allow us to ship extra complete, extra aggressive, really end-to-end experience-first AI-native options,” he wrote.

No matter the way you place it, the deal, which pays $40 a share, or a 32% premium over the closing worth on January 8 (per CNBC), represented the form of supply that was arduous for Juniper to refuse. Assuming regulators don’t object — not precisely a given as of late — this deal may shut later this 12 months or early subsequent. They’re giving loads of wiggle room for regulatory oversight.

Because the deal was introduced on January 12, HPE buyers appear lukewarm about it; that’s, if the inventory worth is any indication of their sentiment. Take into account that on January 8, the day the WSJ broke the information {that a} deal between the 2 firms was imminent, the inventory worth sat at $17.72 a share. By January 12, when the deal was formally introduced, the worth was right down to $15.89, and it has been wallowing there ever since, closing Thursday at $15.92, down nearly 8% for the month. That’s not precisely a ringing endorsement.

With a few weeks within the rearview to digest this deal, we determined to take a look at simply what this was about, and whether or not buyers ought to perhaps be slightly extra constructive about it. As you’ll see, the businesses suppose the numbers look fairly good, and so they actually do match up properly (as long as HPE doesn’t mess it up).

Is it actually about AI?

It’s arduous to search out something as of late in tech that isn’t being positioned with an AI focus, so it shouldn’t come as a shock that the businesses are making AI the centerpiece of this deal. However is that actually correct?

Leave a Comment