HPE to acquire Juniper Networks to accelerate AI-driven innovation

 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[1]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% 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 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) 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 ApprovalsUnder 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.AdvisorsJ.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.

Saudi IT decision-makers consider automation of networking solutions crucial

Juniper Networks, a leader in secure, AI-driven networks, today announced the findings of a survey based in Saudi Arabia examining the understanding of the experience economy among IT decision makers and enterprise employees. The research also considers the strategic influence of the experience economy on future IT investments and gauges the level of digital readiness among organisations in the context of the Digital Economy Policy of Saudi Arabia.The experience economy refers to an economic model where public and private sector organisations shift their focus from selling products or services to offering and monetising memorable and transformative experiences for their customers.The new research, conducted by Censuswide* on Juniper’s behalf, surveyed 304 IT decision makers with over 500 employees across the government, education, retail, oil/ gas, healthcare, travel and transport and manufacturing & utilities sectors of the UAE and KSA’s economies. The IT respondents are directly involved in executing their organisation’s digitisation efforts, technology investment plans and talent development.The research highlights that 45 percent of respondents in Saudi Arabia think their organisation's C-level leadership does have a thorough understanding of the experience economy concept. Additionally, 83 percent of respondents agree[1] that their organisation is already capitalising on the experience economy.Within this context, the findings provide insights into three key themes: digital maturity, value of an intelligent network, AI-driven talent and skilling.Digital Maturity vs. Challenges to Digitisation:Categorising organisations into relative levels of digital transformation, 37 percent of respondents in Saudi Arabia consider their organisation to be a leader in digital transformation. In comparison, only nine percent think their organisation is a digital laggard. Bearing in mind IT investment is a major boost for an organisation on its digital journey, 33 percent of respondents in Saudi Arabia said that their organisation has already invested in capable IT infrastructure to deliver optimised, personalised experiences to employees and customers. A further 52 percent said their organisation is currently investing in capable IT infrastructure, highlighting the importance of the network in driving successful digital transformation.While these numbers indicate the level of appetite among organisations in Saudi Arabia for digital transformation and the experience economy, surprisingly, it is peer pressure and a fear of being left behind that appear to be a key driver in many people’s minds. As highlighted by 53 percent of respondents in Saudi Arabia, the driving factor for the uptake within their organisations is benchmarking competitors and peers performing better at digitisation.  While the level of digital maturity and capable IT infrastructure appears to be in place for most organisations, challenges to delivering digital experiences that matter to customers still exist. Additionally, the research found that 32 percent of respondents in Saudi Arabia highlighted lack of digital strategy and planning as their primary challenge, followed by budget constraints (29 percent) and buy-in from the C-level leadership (21 percent).The Value of Investing in an Intelligent Network:While organisations are investing in agile IT infrastructures to deliver on the promise of enhanced products and services, the role of intelligent networking solutions has taken center-stage in this conversation across the board. Laying emphasis on capitalisation of the experience economy, 99 percent of respondents in Saudi Arabia feel their C-level leadership considers the network to be critically important/important. However, in an effort to demand more from networking solutions, 99 percent of respondents in Saudi Arabia believe automation of networks is critically important/important to lead in the experience economy.The experience economy has also impacted workplace trends that are further shaping how organisations work and operate. As the workforce adapts to new and flexible modes of work, 87 percent of respondents in Saudi Arabia strongly agree/somewhat agree that their organisation’s networking strategies need to be elevated to keep pace with hybrid or remote work models. Adding to that, 88 percent strongly agree/somewhat agree that leveraging the 5G network is essential to accelerate the experience for employees and customers.Talent and Skill Building Mandates in the Artificial Intelligence Era:Almost all (96 percent[2]) of respondents in Saudi Arabia feel AI, Analytics and Cloud play a positive role in their organisation, and these areas are considered to be enablers of better digital user experiences and business efficiency.However, an AI-powered future requires adaptability, which can only be achieved through skill building. Nevertheless, continuing the positive perceptions, 96 percent of respondents in Saudi Arabia agree that their IT team members are mostly skilled/completely skilled to leverage AI-driven networking solutions. “While Dynamic technology trends shape industries, and it is evident from our research findings that organisations in Saudi Arabia are keen to step up their digitisation efforts to capitalise on the experience economy. Two key factors that can drive them forward on this journey are robust, intelligent AI-driven networking solutions and building efficient IT skill sets. Hand in hand, both these factors can support IT decision makers and the workforce to elevate operational capabilities to keep up with the pace of an experience-led market. Overall, this also correlates to goals of the Digital Economy Policy of Saudi Arabia that center on advancing digital transformation,” said Yarob Sakhnini (pictured above), Vice President, Emerging Markets, EMEA at Juniper Networks.