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HPE reported on Tuesday that it plans to acquire Juniper Networks for $14 billion. If completed, the deal will significantly strengthen HPE's strategy for providing cloud-based infrastructure for generative AI, analysts said.
Under the all-cash deal, HPE agreed to pay $40 per share for Juniper, which would double HPE's networking business. Juniper CEO Rami Rahim will lead the combined operation, reporting directly to HPE CEO Antonio Neri. HPE expects to close the deal by early 2025.
"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," Neri said in a statement.
HPE plans to use Juniper's hardware and software to make networking a "core business and architecture foundation" for HPE's GreenLake hybrid cloud and AI platform, the company said.
Juniper entered 2024 with an underperforming stock, making the company a takeover candidate. The company's stock price fell 8% in 2023, while the tech-heavy Nasdaq Composite gained 43%. Juniper ended the year with a market value of $9 billion.
Juniper, a longtime rival of Cisco, provides data center routers and Ethernet switches to mainstream enterprises, telecommunication companies and financial institutions. It also has a wireless LAN product line with management and automation capabilities powered by its Mist AI and machine-learning platform.
HPE is the offspring of the 2015 split of Hewlett Packard into separate businesses. HPE sells cloud services, data center servers and storage arrays, while HP offers laptops, desktops and printers.
Priority one for HPE will likely incorporate Juniper's data center networking gear into the supercomputing infrastructure and software it launched as a cloud service last June, IDC analyst Rohit Mehra said. The GreenLake for Large Language Models service will help enterprises train, tune and deploy LLMs for generative AI applications.
"The data center-focused Ethernet portfolio that Juniper has is certainly much more advanced in its ability to construct Ethernet fabrics that will be the connectivity backbone for networks running GenAI workloads," Mehra said.
HPE's entry into the GenAI market is critical as enterprises finalize their strategies to use AI to cut costs by making business operations more efficient. Companies that tested and experimented with GenAI in 2023 reported plans to deploy the technology gradually starting this year.
Acquiring Juniper will strengthen the AI capabilities within HPE's Aruba networking portfolio, which includes wireless LAN, software-defined WAN and Secure Access Service Edge products, analysts said.
Today, the HPE Aruba brand competes directly with the Juniper Mist AI software and switches, so there would be significant product overlap by bringing the two portfolios together.
Nevertheless, the combination would make HPE a stronger competitor against market share leader Cisco, said Brandon Butler, an IDC analyst who follows HPE Aruba and Juniper Mist closely.
Juniper has built Mist into a strong competitor within the market for AI for IT operations, Butler said. AIOps is an umbrella term for using big data analytics, machine learning and other AI technologies to automate the correction of common IT issues.
"There are some potential benefits of Aruba getting some of the AIOps capabilities from Mist," Butler said.
HPE could incorporate Mist AI into the Aruba cloud-based network management platform or sell it separately with related switches and wireless access points, Butler said.
Either way, HPE takes Mist into a much more extensive network of channel partners, including resellers, value-added resellers and managed service providers, he said.
Since acquiring Mist Systems in 2019, Juniper has built its namesake product into a significant player in the branch and campus networking market, Butler said.
"Mist is a strong asset within Juniper and one of its fastest-growing assets," he said. "So, how a broader [technology supplier like] HPE could continue that momentum will be a key question for this acquisition."
Antone Gonsalves is an editor at large for TechTarget Editorial, reporting on industry trends critical to enterprise tech buyers. He has worked in tech journalism for 25 years and is based in San Francisco.