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On January 9, 2024, Hewlett Packard Enterprise HPE announced its goal to acquire network appliance provider Juniper Networks in an all-cash transaction valued at approximately $14 billion, with a percentage valued at $40.
This decision is expected to have a significant impact on the networking industry. HPE expects to complete the acquisition by the end of this year or early 2025, marking a significant step forward in its strategic expansion, as cited in CNBC.
Following the Wall Street Journal’s report on complex negotiations between HPE and Juniper, Juniper shares registered a whopping 21. 8% on January 9, 2024, ending at $37. 05, representing a very wide premium of 32% over the previous day’s final price.
Juniper has moderate exposure to telecom ETFs like SPDR S&P Telecom ETF XTL,iShares U.S. Telecommunications ETF IYZ as well as cybersecurity ETFs like iShares Cybersecurity & Tech ETF IHAK and First Trust NASDAQ Cybersecurity ETF CIBR. These ETFs are likely to get a boost from the above-mentioned acquisition.
Juniper Networks, founded in 1996, has long competed with networking giant Cisco (CSCO). In 2022, the company achieved 12% year-over-year cash growth since 2010. In its last peak quarter, Juniper reported a profit of $76 million on cash income of $1. 4 billion, down 1% slightly from last year.
HPE expects the deal to grow its adjusted earnings consistently with the percentage in the first year after closing, representing its commitment to creating consistent value for the percentage owner. HPE believes that the addition of Juniconsistent with Networks to its portfolio will benefit its margins and drive its expansion. track record in the highly competitive networking industry.
The acquisition is expected to generate annual savings of $450 million within 3 years of completion and operational efficiencies.
If the acquisition is completed, Rami Rahim, Chief Executive Officer of Juniper, will lead the combined entity and report to HPE CEO Antonio Neri. This transition signals a significant shift in the network landscape.
In particular, Hewlett-Packard’s entry into the networking industry in 2015, when it acquired Aruba Networks. Subsequently, the company split into two entities: HPE, which specializes in servers and data center devices, and HP Inc. , which focuses on PCs and printers.
HPE’s Networking segment is a major driver of the company’s pre-tax revenue, generating $401 million on a profit of $1. 4 billion, representing solid growth of 41%.
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Hewlett Packard Enterprise Company (HPE): Free Inventory Analysis Report
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iShares Cybersecurity & Technology ETF (IHAK): ETF Research Reports
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