• The US Department of Justice had blocked the proposed acquisition of Juniper Networks by Hewlett Packard Enterprise
• But, somewhat unexpectedly, a deal has been agreed between the parties
• HPE has agreed to offload its Instant On wireless LAN networking unit and license Juniper’s Mist AIOps source code

Hewlett Packard Enterprise (HPE) has struck a conditional agreement with the US Department of Justice (DoJ) that clears the way for the vendor’s $14bn acquisition of Juniper Networks, an M&A deal that the DoJ had been trying to block on antitrust grounds. 

HPE announced its planned purchase of Juniper Networks in January 2024, noting at the time that Juniper’s networking and AI expertise would significantly enhance its portfolio. “The acquisition is expected to double HPE’s networking business… The explosion of AI and hybrid cloud-driven business is accelerating demand for secure, unified technology solutions that connect, protect and analyse companies’ data from edge to cloud,” noted HPE in its acquisition announcement. “These trends, and AI specifically, will continue to be the most disruptive workloads for companies, and HPE has been aligning its portfolio to capitalise on these substantial IT trends with networking as a critical connective component,” it added – see HPE confirms $14bn deal to acquire Juniper Networks.

But while the European Commission (EC) gave the acquisition its unconditional approval, the DoJ was concerned about the impact the deal would have on market competition and, in January this year, started a legal process to block the deal. It argued that the merger would negatively impact competition in the US enterprise-grade wireless LAN (WLAN) technology sector. “HPE and Juniper are the second- and third-largest providers, respectively, of enterprise-grade WLAN solutions in the United States,” noted the DoJ. “The proposed transaction would eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation and diminish choice for scores of American businesses and institutions,” it added. 

A court hearing had been set for 9 July, but now the parties have reached a conditional agreement that looks likely to allow the acquisition to be completed. 

“Achieving a result otherwise unavailable through litigation, earlier today the Justice Department advised the court it had reached a settlement with HPE and Juniper that allows their merger to continue,” the DoJ noted in this announcement, before patting itself on the back and announcing the agreement as “a key legal victory”. 

The settlement requires HPE to offload its Instant On enterprise WLAN business, part of its Aruba Networking division, “including all assets, intellectual property, R&D personnel and customer relationships, to a DOJ-approved buyer within 180 days” of the acquisition being completed. This means HPE now needs to scramble to find a suitable buyer to enable it to proceed with its own M&A-driven strategy. 

In addition, HPE has agreed to make “key software assets… available to rivals looking to compete with the merged company.” Specifically, once the HPE/Juniper deal is completed, the company must “hold an auction to license Juniper’s AI Ops for Mist source code – an important component in modern WLAN systems. The licence will be perpetual, non-exclusive and include optional transitional support and personnel transfers to facilitate competition,” noted the DoJ. 

Naturally, HPE also put a positive spin on the settlement in this press release. “The agreement satisfies the Department of Justice’s concerns while maintaining the overall value of the transaction to HPE customers, partners and shareholders,” it noted in this announcement issued over the weekend. 

The settlement with the DoJ is subject to court approval, but at this stage that seems a formality, and HPE is now planning its bigger and (it hopes) brighter future. It’s fair to say that many in the industry, including executives at HPE and Juniper, were not confident that a positive outcome was possible, so news of the settlement will come as a major boost to the vendors and no doubt be reflected in their respective share prices during Monday trading: HPE’s takeover offer is for $40 in cash for each Juniper Networks share, which were trading at just $36.82 on the New York Stock Exchange (NYSE) at the end of last week, so you can expect that price to shoot up quickly.    

 “Our agreement with the DoJ paves the way to close HPE’s acquisition of Juniper Networks and preserves the intended benefits of this deal for our customers and shareholders, while creating greater competition in the global networking market,” stated HPE president and CEO Antonio Neri. “For the first time, customers will now have a modern network architecture alternative that can best support the demands of AI workloads. The combination of HPE Aruba Networking and Juniper Networks will provide customers with a comprehensive portfolio of secure, AI-native networking solutions, and accelerate HPE’s ability to grow in the AI datacentre, service provider and cloud segments.”

Juniper Networks CEO Rami Rahim added: “This marks an exciting step forward in delivering on a critical customer need – a complete portfolio of modern, secure networking solutions to connect their organisations and provide essential foundations for hybrid cloud and AI. We look forward to closing this transaction and turning our shared vision into reality for enterprise, service provider and cloud customers.” 

No timeline has been provided for the closing of the deal. 

- Ray Le Maistre, Editorial Director, TelecomTV