Yahoo Finance HPE-Juniper Pact to Boost Telecom & Cybersecurity ETFs
On Jan 9, 2024,Hewlett Packard Enterprise HPE has announced its intention to acquire networking gear vendor Juniper Networks in an all-cash deal valued at approximately $14 billion, with each share priced at $40.
This move is set to significantly impact the networking industry. HPE anticipates finalizing the acquisition either late in the current year or early in 2025, marking a crucial development in their strategic expansion, as quoted on CNBC.
Juniper's Soaring Shares
Following the Wall Street Journal's report of late-stage talks between HPE and Juniper, Juniper's shares experienced a massive 21.8% surge on Jan 9, 2024, closing at $37.05, which represents a substantial premium of 32% over the previous day's closing price.
Juniper has moderate exposure to telecom ETFs like SPDR S&P Telecom ETF XTL,iShares U.S. Telecommunications ETF IYZ as well as cybersecurity ETFs like iShares Cybersecurity & Tech ETF IHAK and First Trust NASDAQ Cybersecurity ETF CIBR. These ETFs are likely to get a boost from the above-mentioned acquisition.
Why Juniper?
Juniper Networks, established in 1996, has long competed with networking giant Cisco (CSCO). In 2022, the company achieved 12% year-over-year revenue growth, the highest since 2010. In its most recent quarter, Juniper posted a $76 million profit on $1.4 billion in revenue, with a slight 1% decline from the previous year.
Accretive to HPE Earnings; Synergies to Generate Cost Savings
HPE projects that the deal will boost its adjusted earnings per share within the first year of closure, representing its commitment to creating shareholder value. HPE believes that the addition of Juniper Networks to its portfolio will bolster profit margins and accelerate its growth trajectory in the highly competitive networking sector.
The acquisition is expected to yield annual cost savings of $450 million within three years of its completion, enhancing operational efficiency.
HPE’s Networking Business to Strengthen
If the acquisition is completed, Juniper CEO Rami Rahim will assume leadership of the combined entity and report to HPE's CEO, Antonio Neri. This transition indicates an important shift in the networking landscape.
Notably, Hewlett-Packard's previous entry into networking occurred in 2015 when it acquired Aruba Networks. Subsequently, the company split into two entities: HPE, specializing in data center equipment and servers, and HP Inc., focused on PCs and printers.
HPE's networking segment has been a significant driver of the company's earnings before taxes, generating $401 million from $1.4 billion in revenue, offering solid 41% growth.
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Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports
iShares U.S. Telecommunications ETF (IYZ): ETF Research Reports
SPDR S&P Telecom ETF (XTL): ETF Research Reports
iShares Cybersecurity and Tech ETF (IHAK): ETF Research Reports
