HPE to Buy Juniper for $14B to Boost AI and Networking

Hewlett Packard Enterprise announced a $14 billion acquisition deal with networking equipment maker Juniper Networks and is touting the deal as a way to position the Silicon Valley stalwart for the burgeoning artificial intelligence market.

See Also: Entering the Era of Generative AI-Enabled Security

The transaction of $40 per share is a premium of 32% more than Juniper’s closing stock price on Tuesday, the day before HPE announced the acquisition. The deal is expected to close late this year or early next year.

“It is a major leap forward in our AI and hybrid cloud strategy,” said HPE CEO Antonio Neri in a Wednesday call with investors. “It creates a new networking leader with a comprehensive portfolio from edge to cloud and is expected to double our networking business.” Juniper CEO Rami Rahim will lead the combined HPE networking business and report to Neri. The deal will add $11.2 billion to HPE debt, including $1.7 billion of assumed Jupiter debt. HPE will pay for the acquisition in part through cash from a 2023 sale of its remaining interest in China-based joint venture H3C for $3.5 billion.

The timing of the deal is unsurprising, given the AI gold rush that has led companies to invest in boosting their capabilities or acquiring companies that can give them an edge. Venture Capital ploughed $68.7 billion into AI and machine learning deals during the first nine months of 2023, according to a December PitchBook report. In 2021, the amount was $139.8 billion.

HPE has already benefited from AI industry growth. It told investors in November that orders for servers containing accelerated processing units for use in AI had added up to 32% of its server segment. Overall net revenue for 2023 was down by 6% compared to the prior year, for a total of $7.4 billion.

The company called its new acquisition a leader in AI-driven networking and highlighted its integration of AI into cloud networking management and its strong presence in data center and routing businesses.

AI “will continue to be the most disruptive workloads for companies,” HPE said in a statement, “with networking as a critical connective component.”

HPE bought into the networking market once before, when it finalized an agreement to buy Aruba Networks in 2015. Today’s announcement will mark HPE’s largest acquisition yet, Neri said.

HPE and Juniper have taken steps to strengthen their secure access service edge offerings even if they are far from dominant. HPE began offering single-vendor SASE to customers following its acquisition of security service edge vendor Axis Security in March. The company already had SD-WAN capabilities from its purchase of Aruba Networks. Like Aruba, Juniper’s heritage is in software-defined networking, and the company has made investments in native security service edge capabilities.

Juniper was the lowest-rated vendor to make Gartner’s Magic Quadrant for single-vendor SASE, while HPE didn’t appear at all. Forrester rated both Juniper and HPE as contenders in the ZTE market, which is its equivalent of SASE.

HPE has roots in Silicon Valley stretching back nearly a century, although it was founded in 2015 when predecessor firm Hewlett-Packard split into separate business- and consumer-focused companies.