Did HPE’s Acquisition of Juniper for $14B Prove to be a Shrewd Decision?

When HPE announced its intention to acquire Juniper Networks for $14 billion in cold, hard cash earlier this month, it was a bit of a shock. In fact, in a blog post announcing the deal, Juniper CEO Rami Rahim suggested it was more about AI. “This combination with HPE is expected to enable us to deliver more comprehensive, more competitive, truly end-to-end experience-first AI-native solutions,” he wrote. Assuming regulators don’t object — not exactly a given these days — this deal could close later this year or early next. Since the deal was announced on January 12, HPE investors seem lukewarm about it; that is, if the stock price is any indication of their sentiment.

HPE shocked the tech world when it declared its intentions to acquire Juniper Networks for a whopping $14 billion in cold, hard cash earlier this month. While HPE had already acquired Aruba in 2015 for around $3 billion, this move to purchase another networking company was unexpected.

It was only natural to assume that this acquisition would simply add another layer to HPE’s business. However, as with any large organization trying to incorporate another, there were bound to be complications. HPE has not had the smoothest track record in the past when it comes to successfully integrating companies.

Yet surprisingly, the companies did not market this as a pure networking play. Instead, Juniper CEO Rami Rahim highlighted the role of AI in this acquisition, stating in a blog post that, This combination with HPE is expected to enable us to deliver more comprehensive, more competitive, truly end-to-end experience-first AI-native solutions.

Regardless of how it is being positioned, the deal pays $40 a share, which represents a 32% premium over the closing price on January 8 (according to CNBC). Such an offer would be hard for Juniper to refuse, assuming regulators do not raise any objections. However, in today’s unpredictable regulatory climate, this is not a given and the deal may face some hurdles before it can be finalized later this year or early next.

Since the announcement of this deal on January 12, HPE investors appear to be lukewarm about it, as evidenced by the stock price. On January 8, the day the Wall Street Journal first reported the possibility of a deal between the two companies, HPE’s stock price was at $17.72 a share. However, by January 12, when the deal was officially announced, the price had dropped to $15.89 and has remained relatively stagnant, closing at $15.92 on Thursday, a nearly 8% decrease for the month. This lackluster response does not bode well for the deal.

After a couple of weeks to digest this news, it’s worth taking a closer look at the deal and whether investors should have a more positive outlook on it. As it turns out, the numbers suggest that the companies are a great match, as long as HPE can avoid any major blunders.

Is it really about AI?

The current trend in tech is to market everything with an AI focus, so it’s no surprise that the companies are doing the same with this deal. But is that truly the case?

It’s becoming increasingly difficult to find anything in the tech industry that isn’t being positioned as AI-driven. So while AI may be at the center of this deal, it’s worth questioning if that is truly accurate.

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Ava Patel

Ava Patel is a cultural critic and commentator with a focus on literature and the arts. She is known for her thought-provoking essays and reviews, and has a talent for bringing new and diverse voices to the forefront of the cultural conversation.

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