NETWORKS

Hewlett Packard Enterprise has acquired Juniper Networks, a well-known leader in networking solutions, to accelerate AI-driven innovation. The acquisition aims to combine Juniper Networks' expertise in networking technology with HPE's advancements in artificial intelligence, cloud supercomputing, and data analytics. Together, they can create powerful synergies to lead the AI-driven innovation landscape. This merger comes at a time when organizations in various industries recognize the transformative potential of AI in driving growth, efficiency, and competitiveness. With this acquisition, HPE aims to enhance its ability to deliver cutting-edge solutions that transform businesses and drive digital transformation. By acquiring Juniper Networks, HPE can harness the power of AI and revolutionize how businesses operate in the digital age. They plan to integrate Juniper Networks' networking capabilities with its AI-driven innovations, offering customers a comprehensive suite of solutions. This integration will enable HPE to deliver advanced networking technology with AI-driven insights and automation. As organizations increasingly rely on AI to optimize their operations and drive business growth, this acquisition will help HPE solidify its position as a technology powerhouse.

Under an agreement 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. This price represents a premium of approximately 32% to the unaffected closing price of Juniper's common stock on January 8, 2024, the last full trading day before media reports regarding a possible 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 should 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 2x 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, one of its growth engines.

After the transaction is completed, Juniper's CEO Rami Rahim will lead the combined HPE networking business and report to HPE's President and CEO Antonio Neri.

Neri said that HPE's acquisition of Juniper marks a significant turning point in the industry. It will change the dynamics of the networking market and provide customers and partners with a new alternative that can meet their toughest demands. This acquisition will strengthen HPE's position in the rapidly growing field of macro-AI trends, expand its total addressable market, and drive further innovation for customers. It will also create significant value for shareholders. Neri is excited to welcome Juniper's talented employees to their team and bring together two companies with complementary portfolios and proven track records of driving innovation in the industry.