When HPE introduced its intention to acquire Juniper Networks for $14 billion in chilly, exhausting money earlier this month, it was a little bit of a shock. Certain, HP had already bought Aruba in 2015 for round $3 billion. Grabbing one other networking firm would presumably simply add one other layer to that enterprise. In fact, there are all the time issues incorporating one giant group into one other, and HP doesn’t precisely have one of the best report for being a smooth operator the place that’s involved through the years.
However surprisingly, the businesses didn’t place this acutely aware coupling as a pure networking play. The truth is, in a weblog put up announcing the deal, Juniper CEO Rami Rahim advised it was extra 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.
No matter the way you place it, the deal, which pays $40 a share, or a 32% premium over the closing worth on January 8 (per CNBC), represented the type of supply that was exhausting for Juniper to refuse. Assuming regulators don’t object — not precisely a given today — this deal may shut later this yr or early subsequent. They’re giving plenty of wiggle room for regulatory oversight.
Because the deal was introduced on January 12, HPE traders appear lukewarm about it; that’s, if the inventory worth is any indication of their sentiment. Think about that on January 8, the day the WSJ broke the news {that a} deal between the 2 corporations was imminent, the inventory worth sat at $17.72 a share. By January 12, when the deal was formally introduced, the value was all the way down to $15.89, and it has been wallowing there ever since, closing Thursday at $15.92, down nearly 8% for the month. That’s not precisely a ringing endorsement.
With a few weeks within the rearview to digest this deal, we determined to have a look at simply what this was about, and whether or not traders ought to possibly be a bit of extra optimistic about it. As you’ll see, the businesses suppose the numbers look fairly good, and so they actually do match up properly (as long as HPE doesn’t mess it up).
Is it actually about AI?
It’s exhausting to search out something today in tech that isn’t being positioned with an AI focus, so it shouldn’t come as a shock that the businesses are making AI the centerpiece of this deal. However is that basically correct?
