South Africa greenlights HP Enterprise’s R252-billion deal to acquire Juniper Networks

South Africa’s Competition Commission has approved the proposed Hewlett Packard Enterprise (HPE) transaction to acquire Juniper Networks.

HPE agreed to purchase Juniper Networks for $14 billion (R252 billion) in January 2024, expanding its presence in networking.

The price represents more than half of HPE’s $21 billion market value and a 32% premium over Juniper’s closing price of $30.22 on Monday, 8 January 2024, before talks of a deal emerged.

However, as Cisco is a direct competitor of Juniper networks, combined with the fact that it and HPE have operations in South Africa, the deal required approval from the Competition Commission.

“The Commission has approved the proposed transaction whereby the acquiring firm (HPE) intends to acquire the target firm (Juniper Networks), without conditions,” the Competition Commission said.

“In South Africa, the Acquiring firm controls Hewlett-Packard South Africa Proprietary Limited (HPSA). The acquiring firm also controls Hewlett-Packard Financial Services Holding Company DAC, a company incorporated in Ireland and registered in South Africa as an external company.”

After the initial announcement, HPE chief executive officer Antonio Neri said the company’s business line will double in size once the deal is closed.

Since its 2015 split from Hewlett-Packard, HPE has focused on expanding lucrative business lines, such as its high-powered computing and cloud services businesses.

However, the company has struggled to grow at a rate of more than 2% in recent years. HPW’s revenue forecast from November 2023 fell short of analysts’ estimates due to a sharp decline in server sales.

HPE plans to finance the purchase through term loans that it will replace “with a combination of new debt, mandatory convertible preferred securities, and cash”.

It expects the deal to be completed in late 2024 or early 2025.

Referring to Cisco, Neri said the HPE-Juniper combination will disrupt the dominance of the industry’s “one large vendor”.

“Today, we are actually creating a second option — a much more modern option that ultimately customers were looking for,” he added.

HPE’s deal to acquire Juniper Networks was cleared by the UK’s antitrust watchdog in early August 2024.

“We will continue working to complete all necessary remaining reviews and secure additional clearances quickly and efficiently,” a HPE spokesperson said.

---

Reporting with Bloomberg.