Highly complementary combination enhances secure, unified, cloud
and AI-native networking to drive innovation from edge to cloud to
exascale
Accelerates long-term revenue growth and expands gross and
operating margin; Expected to be accretive to non-GAAP EPS and free
cash flow in year 1, post close
Advances HPE’s portfolio mix shift toward higher-growth
solutions and strengthens high-margin networking business
Hewlett Packard Enterprise (NYSE: HPE) and Juniper Networks,
Inc. (NYSE: JNPR), a leader in AI-native networks, today announced
that the companies have entered a definitive agreement under which
HPE will acquire Juniper in an all-cash transaction for $40.00 per
share, representing an equity value of approximately $14
billion.
The combination of HPE and Juniper advances HPE’s portfolio mix
shift toward higher-growth solutions and strengthens its
high-margin networking business, accelerating HPE’s sustainable
profitable growth strategy. The transaction is expected to be
accretive to non-GAAP EPS and free cash flow in the first year post
close.
The acquisition is expected to double HPE’s networking business,
creating a new networking leader with a comprehensive portfolio
that presents customers and partners with a compelling new choice
to drive business value. The explosion of AI and hybrid
cloud-driven business is accelerating demand for secure, unified
technology solutions that connect, protect, and analyze companies’
data from edge to cloud. These trends, and AI specifically, will
continue to be the most disruptive workloads for companies, and HPE
has been aligning its portfolio to capitalize on these substantial
IT trends with networking as a critical connective component.
Combining HPE and Juniper’s complementary portfolios
supercharges HPE’s edge-to-cloud strategy with an ability to lead
in an AI-native environment based on a foundational cloud-native
architecture. Together, HPE and Juniper will provide customers of
all sizes with a complete, secure portfolio that enables the
networking architecture necessary to manage and simplify their
expanding and increasingly complex connectivity needs. Leveraging
industry-leading AI, the combined company is expected to create
better user and operator experiences, benefitting customers’
high-performance networks and cloud data centers.
Through its suite of cloud-delivered networking solutions,
software, and services including the Mist AI and Cloud platform,
Juniper helps organizations securely and efficiently access the
mission-critical cloud infrastructure that serves as the foundation
of digital and AI strategies. The combination with HPE Aruba
Networking and purposely designed HPE AI interconnect fabric will
bring together enterprise reach, and cloud-native and AI-native
management and control, to create a premier industry player that
will accelerate innovation to deliver further modernized networking
optimized for hybrid cloud and AI.
Upon completion of the transaction, Juniper CEO Rami Rahim will
lead the combined HPE networking business, reporting to HPE
President and CEO Antonio Neri.
“HPE’s acquisition of Juniper represents an important inflection
point in the industry and will change the dynamics in the
networking market and provide customers and partners with a new
alternative that meets their toughest demands,” said Neri. “This
transaction will strengthen HPE’s position at the nexus of
accelerating macro-AI trends, expand our total addressable market,
and drive further innovation for customers as we help bridge the
AI-native and cloud-native worlds, while also generating
significant value for shareholders. I am excited to welcome
Juniper’s talented employees to our team as we bring together two
companies with complementary portfolios and proven track records of
driving innovation within the industry.”
“Our multi-year focus on innovative, secure AI-native solutions
has driven Juniper Networks’ outstanding performance,” said Rami
Rahim, CEO of Juniper Networks. “We have successfully delivered
exceptional user experiences and simplified operations, and by
joining HPE, I believe we can accelerate the next phase of our
journey. In addition, this combination maximizes value for our
shareholders through a meaningful all-cash premium. We look forward
to working with the talented HPE team to drive innovation for
enterprise, service provider and cloud customers across all
domains, including campus, branch, data center and the wide area
network.”
Compelling Strategic Benefits
- Compelling pro forma financial profile. In addition to
the expected non-GAAP accretion, the combined company is expected
to have attractive top- and bottom-line growth opportunities
immediately and in the long term.
- Positions HPE for long-term growth for shareholders and
greater investment capacity. With Juniper, HPE’s portfolio will
be weighted toward higher-growth, higher-margin businesses with
large free cash flow potential, positioning HPE to enhance
shareholder return and enabling additional investments in
high-growth areas, such as AI and cloud. On a pro forma basis, the
new networking segment will increase from approximately 18% of
total HPE revenue as of fiscal year 2023 to approximately 31%1 and
contribute more than 56%1,2 of HPE’s total operating income.
- Complementary capabilities to deliver next-generation
AI-native networking and enable new digital experiences through
secure, intelligent connectivity. Networking will become the
new core business and architecture foundation for HPE’s Hybrid
Cloud and AI solutions delivered through our HPE GreenLake hybrid
cloud platform. The combined company will offer secure, end-to-end
AI-native solutions that are built on the foundation of cloud, high
performance, and experience-first, and will also have the ability
to collect, analyze, and act on aggregated telemetry across a
broader installed base. This will drive even better end-user
experiences and streamlined network operations for our
customers.
- Accelerates HPE’s strategic evolution and expands total
addressable market. The acquisition increases the scope of
HPE’s networking business and will create meaningful opportunities
to provide even more comprehensive solutions to Juniper’s installed
base of enterprise customers, communication service providers and
tier-one cloud customers, as well as launches HPE into adjacent
large segments, including data center networking, firewalls, and
routers. It also grows Juniper’s footprint in data centers and
cloud providers.
Transaction Details and Approvals
Under the terms of the agreement, which has been 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. The purchase 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 prior to 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 is expected to 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.
Advisors
J.P. Morgan Securities LLC and Qatalyst Partners are serving as
HPE’s financial advisors. Committed financing for the transaction
has been provided by Citigroup Global Markets Inc., JPMorgan Chase
Bank, N.A. and Mizuho Bank, Ltd. Wachtell, Lipton, Rosen &
Katz, Covington & Burling LLP, and Freshfields Bruckhaus
Deringer LLP are serving as legal counsel. Goldman Sachs & Co.
LLC is serving as Juniper’s exclusive financial advisor and
Skadden, Arps, Slate, Meagher & Flom is serving as legal
counsel.
Conference Call Details
HPE and Juniper will host a conference call tomorrow at 7:30
a.m. CT (8:30 a.m. ET) to discuss the announcement. The call will
include a slide presentation and participants are encouraged to
view the presentation via webcast at
www.hpe.com/investor/HPE-To-Acquire-Juniper-Conference-Call.
About Hewlett Packard Enterprise
Hewlett Packard Enterprise (NYSE: HPE) is the global
edge-to-cloud company that helps organizations accelerate outcomes
by unlocking value from all of their data, everywhere. Built on
decades of reimagining the future and innovating to advance the way
people live and work, HPE delivers unique, open and intelligent
technology solutions as a service. With offerings spanning Cloud
Services, Compute, High Performance Computing & AI, Intelligent
Edge, Software, and Storage, HPE provides a consistent experience
across all clouds and edges, helping customers develop new business
models, engage in new ways, and increase operational performance.
For more information, visit: www.hpe.com.
About Juniper Networks
Juniper is dedicated to dramatically simplifying network
operations and driving superior experiences for end users. Our
solutions deliver industry-leading insight, automation, security
and AI to drive real business results. We believe that powering
connections will bring us closer together while empowering us all
to solve the world’s greatest challenges of well-being,
sustainability and equality. Additional information can be found at
https://www.juniper.net/ or connect with Juniper on X (formerly
Twitter), LinkedIn and Facebook.
Forward-Looking Statements
This document contains “forward-looking statements” within the
meaning of the federal securities laws, including safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such
statements involve risks, uncertainties and assumptions and are
based on Juniper’s and HPE’s current expectations, estimates,
projections, beliefs and assumptions made by Juniper and HPE, all
of which are subject to change. In this context, forward-looking
statements often address expected future business, financial
performance and financial condition, and often contain words such
as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,”
“seek,” “see,” “will,” “may,” “would,” “might,” “potentially,”
“estimate,” “continue,” “expect,” “target,” and similar expressions
or the negatives of these words or other comparable terminology
that convey uncertainty of future events or outcomes. All
forward-looking statements by their nature address matters that
involve risks and uncertainties, many of which are beyond Juniper’s
and HPE’s control, and are not guarantees of future results. These
and other forward-looking statements are not guarantees of future
results and are subject to risks, uncertainties and assumptions
that could cause actual results to differ materially from those
expressed in any forward-looking statements and you should not
place undue reliance on any such statements, and caution must be
exercised in relying on forward-looking statements. Important risk
factors that may cause such a difference include, but are not
limited to: (i) the completion of the proposed transaction on
anticipated terms and timing or at all, including obtaining
stockholder and regulatory approvals and other conditions to the
completion of the transaction; (ii) the ability of HPE to integrate
and implement its plans, forecasts and other expectations with
respect to Juniper’s business after the completion of the proposed
transaction and realize additional opportunities for growth and
innovation; (iii) the occurrence of any event, change or other
circumstance or condition that could give rise to the termination
of the merger agreement; (iv) Juniper’s and HPE’s ability to
implement their respective business strategies; (v) potential
significant transaction costs associated with the proposed
transaction; (vi) the risks related to HPE’s financing of the
proposed transaction, (vii) potential litigation or regulatory
actions relating to the proposed transaction; (viii) the risk that
disruptions from the proposed transaction will harm Juniper’s or
HPE’s business, including current plans and operations, and risks
related to diverting management’s attention from Juniper’s and
HPE’s ongoing business operations and relationships; (ix) the
ability of Juniper and HPE to retain and hire key personnel; (x)
potential adverse business uncertainty resulting from the
announcement, pendency or completion of the proposed transaction,
including restrictions during the pendency of the proposed
transaction that may impact Juniper’s and HPE’s ability to pursue
certain business opportunities or strategic transactions; (xi)
legal, regulatory, tax and economic developments affecting
Juniper’s and HPE’s business; (xii) the unpredictability and
severity of catastrophic events, including, but not limited to,
acts of terrorism, outbreak of war or hostilities or current or
future pandemics or epidemics, as well as Juniper’s and HPE’s
response to any of the aforementioned factors; and (xiii) other
risks described in Juniper’s and HPE’s filings with the SEC, such
risks and uncertainties described under the headings
“Forward-Looking Statements,” “Risk Factors” and other sections of
HPE’s Annual Report on Form 10-K for its fiscal year ended October
31, 2023, Juniper’s Annual Report on Form 10-K for its fiscal year
ended December 31, 2022, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and other filings made by HPE or Juniper from
time to time with the SEC. These risks should not be considered a
complete statement of all potential risks and uncertainty, and are
discussed more fully, along with other risks associated with the
proposed transaction, in the Proxy Statement (as defined below) to
be filed with the SEC in connection with the proposed transaction.
Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements. Juniper and HPE do
not assume any obligation to publicly provide revisions or updates
to any forward-looking statements, whether as a result of new
information, future developments or otherwise, should circumstances
change, except as otherwise required by securities and other
applicable laws.
Additional Information and Where to Find It
In connection with the proposed transaction between Juniper and
HPE, Juniper will file with the SEC a proxy statement (the
“Proxy Statement”), the definitive
version of which will be sent or provided to Juniper stockholders.
Juniper may also file other documents with the SEC regarding the
proposed transaction. This document is not a substitute for the
Proxy Statement or any other document which Juniper may file with
the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR
WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
security holders may obtain free copies of the Proxy Statement
(when it is available) and other documents that are filed or will
be filed with the SEC by Juniper through the website maintained by
the SEC at www.sec.gov, Juniper’s investor relations website at
https://investor.Juniper.net or by contacting the Juniper investor
relations department at the following:
Jess Lubert Juniper Networks (408) 936-3734 jlubert@juniper.net
http://www.juniper.net/
Participants in the Solicitation
Juniper and certain of its directors, executive officers and
other employees, under SEC rules, may be deemed to be participants
in the solicitation of proxies from Juniper’s stockholders in
connection with the proposed transaction. Information regarding
Juniper’s directors and executive officers, including a description
of their direct interests, by security holdings or otherwise, is
contained in Juniper’s proxy statement for its 2023 annual meeting
of stockholders (the “Annual Meeting Proxy
Statement”), which was filed with the SEC on March 29, 2023,
and will be set forth in the Proxy Statement and other materials to
be filed with the SEC in connection with the proposed transaction
(if and when they become available). To the extent holdings of
Juniper’s securities by its directors or executive officers have
changed since the amounts set forth in the Annual Meeting Proxy
Statement, such changes have been or will be reflected on Initial
Statements of Beneficial Ownership on Form 3 or Statements of
Beneficial Ownership on Form 4 filed with the SEC. Additional
information regarding the identity of potential participants, and
their direct or indirect interests, by security holdings or
otherwise, will be included in the Proxy Statement relating to the
proposed transaction when it is filed with the SEC. Investors and
security holders may obtain free copies of these documents using
the sources indicated above.
1 Includes HPE Intelligent Edge / HPE financials for fiscal year
2023 and Juniper financials for LTM 09/30/23 2 Pro forma operating
profit includes impact of run-rate cost synergies of $450 million
(assumed 100% contribution to Intelligent Edge)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240109534304/en/
Media Contacts: HPE Laura Keller laura.keller@hpe.com
Juniper Penny Still +44 (0) 1372 385 692 pstill@juniper.net
Investor Contacts: HPE Jeff Kvaal
investor.relations@hpe.com
Juniper Jess Lubert (408) 936-3734 jlubert@juniper.net
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