HPE’s $14 bn deal to buy Juniper Networks faces probe in UK

The Competition and Markets Authority, Britain’s competition regulator, said it started investigating whether Hewlett Packard Enterprise’s $14 billion deal to acquire rival Juniper Networks, would result in competition concerns in the country.

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CMA has until August 14 to decide whether it would refer the deal to a deeper probe.

Hewlett Packard Enterprise (HPE) said in January it would buy networking gear maker Juniper Networks to bolster its artificial intelligence (AI) offerings. HPE expects to double its networking business through the deal.

HPE said the combined networking segment will increase from 18 percent of total HPE revenue as of fiscal year 2023 to 31 percent and contribute more than 56 percent of HPE’s operating income.

The proposed cash deal increases the scope of HPE’s networking business and will create opportunities to provide more comprehensive solutions to Juniper’s enterprise customers, communication service providers and cloud customers. HPE will gain from adjacent large segments, including data center networking, firewalls, and routers. It also grows Juniper’s footprint in data centers and cloud providers.

The combination of Juniper Networks and HPE 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.

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