Shares of Juniper Networks (NYSE: $JNPR) jumped over 21% in extended trading Monday after the Wall Street Journal reported Hewlett Packard (NYSE: $HPE) is in late-stage discussions to acquire Juniper in a deal worth around $13 billion.
Hewlett Packard’s stock plunged by almost 8%, while Juniper shares surged Tuesday morning on the news.
Juniper designs and provides networking products and services worldwide, including routing, switching, Wi-Fi, network security, AI-driven networking, and software-defined networking.
According to the WSJ, the potential acquisition would bolster HPE’s artificial intelligence capabilities. Juniper operates Mist AI, a cloud AI platform that streamlines wired and wireless network operations.
Juniper Networks Brings AI and Networking Expertise
Juniper Networks possesses extensive expertise in AI-driven networking and security. Combining this with HPE’s infrastructure strengths could enable major innovations in AI IT solutions.
The deal may unlock strategic benefits for HPE and reshape its position in the tech sector. It could lead to an expanded suite of AI offerings for data centers, cloud, edge computing, and more.
The companies plan to jointly develop a full-stack AI solution to simplify deployment for organizations. This would allow quick customization of foundation models using private data across edge, cloud, etc.
According to Juniper’s CEO, revenue from Mist AI has nearly doubled in recent quarters. Expanding these capabilities across more network layers is part of Juniper’s strategy.
HPE Stock Falls Nearly 8%, Juniper Jumps to $37
HPE shares dropped close to 8% Tuesday despite strong 2022 gains. Hewlett Packard currently has a market cap of approximately $21.3 billion.
Juniper Networks climbed to $37.25 per share after closing Monday at $30.22, ballooning its market cap to $11.7 billion.
Despite recent gains, analysts believe Juniper’s fair valuation still remains significantly above the current trading price and consensus analyst target.
HPE and Juniper Could Strike Mega Deal Amidst Sluggish Tech Merger Climate
An acquisition of Juniper Networks by Hewlett Packard Enterprise would be among the largest technology sector mergers in recent years. The technology industry has historically driven most merger activity, but dealmaking has stagnated due to increased antitrust scrutiny from Washington regulators.
Tougher approval standards and oversight of proposed deals have contributed to a slowdown in tech mergers and acquisitions. A potential HPE-Juniper deal would stand out as a rare major transaction in the current climate of cautious technology consolidation.
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