Hewlett Packard Enterprise (HPE) is reportedly looking to acquire Juniper Networks (JNPR) for $13 billion, according to the Wall Street Journal.
Shares of Juniper surged 21% Tuesday.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
SEANA SMITH: Hewlett-Packard Enterprise reportedly looking to buy Juniper Networks as it looks to accelerate its AI product rollout. A deal could be announced sometime this week, valuing Juniper at roughly $13 billion. Now this is according to the "Wall Street Journal", citing people familiar with the matter. We want to bring in "Yahoo Finance's" Josh Lipton, here to break it all down, and why this could make sense here, Josh.
JOSH LIPTON: Yeah, it's great to be with you, guys, this morning. So this could make sense, both financially and strategically, according to financial analysts covering HPE and Juniper. Evercore, saying $13 billion for Juniper would be a fairly reasonable valuation across both peers and Juniper's own historical ranges. And the team there also says that from a financial perspective, the deal could be accretive if HPE can get Juniper's margins closer to its long-term target in the mid 20s.
So what's the strategy behind this deal? Well, the "Journal", which broke this news, says it's all about AI. Juniper, of course, is best known for selling hardware like switches and routers to corporate customers, but it's also operating an AI business called Mist AI, which Juniper's CEO recently talked about here on "Yahoo Finance".
RAMI RAHIM: Our mystified-- what we call our mystified solution-- which is driven by AI technology that's essentially enabling us to run networks more efficiently, delight our network operators, delight the end user-- has grown over the last two reported quarters approximately 100% year over year. This doesn't happen by accident. We're taking share at an unprecedented rate. And this is proof that AI is not just in its hype cycle, it's proof that AI is actually delivering real results for our end customers.
JOSH LIPTON: So the idea behind this deal could be that HPE CEO Antonio Neri is now looking for new ways to strengthen his business with new AI solutions. Perhaps he thinks Juniper's Mist AI is the answer. Juniper acquired Mist in 2019. Revenue was about $150 million in 2020. Analysts note sales are expected to reach about $700 million in calendar 2023. We could soon find out if this deal really does happen. The "Journal" is saying a deal could be announced as soon as this week, guys.
