Hewlett Packard Enterprise said it's agreed to buy networking gear vendor Juniper Networks for about $14 billion, or $40 per share, in an all-cash deal.
HPE expects to close the deal late this year or in early 2025, the company said in a statement. The announcement came a day after the Wall Street Journal reported that the companies were in late-stage talks.
Juniper shares had their best day in 20 years on Tuesday after the Journal report, which said a deal could be announced this week. The shares jumped 22% to close at $37.05. The purchase price of $40 a share represents a 32% premium over Monday's close before the Journal story published.
HPE said the deal would be accretive to its adjusted earnings per share in the first year after it closes.
The acquisition would double HPE's existing networking business after years of competition. If it's completed, Juniper CEO Rami Rahim would lead the combined group and report to HPE's CEO, Antonio Neri, according to the statement.
Hewlett-Packard went deeper in networking when it bought Aruba Networks in 2015. Months later, HP split in two, resulting in the formation of HPE, which sells servers and other equipment for data centers, and HP Inc., which makes PCs and printers.
HPE said adding Juniper to its portfolio would bolster margins and speed up growth.
Founded in 1996, Juniper spent many years chasing Cisco in the market for networking gear. Revenue grew 12% year over year in 2022, the fastest growth since 2010. In the most recent quarter, Juniper eked out a $76 million profit on $1.4 billion in revenue, which declined 1% from the prior year.
HPE's networking segment was the company's top source of earnings before taxes, at $401 million on $1.4 billion in revenue, which was up 41%.
Coming together would lead to $450 million in annual cost savings within three years of the deal's completion, HPE said.
The two companies will discuss the deal on a conference call starting at 8:30 a.m. ET on Wednesday.
JPMorgan and Qatalyst advised HPE, according to the statement.
— CNBC's Ari Levy contributed to this report.
