HPE reportedly working on $13 billion Juniper Networks acquisition

A deal could be announced as early as this week, the Wall Street Journal reported, having picked up the story from unnamed sources familiar with the matter.

Presumably those sources were hoping to gauge the market's reaction to the news. Early indications suggest it's not a wholly popular move, with HPE's shares tumbling as the story broke. Juniper Networks was up by more than 23% at the time of writing though.

The reported price tag is likely one reason behind those stock price movements. $13 billion is a hefty chunk of change by anyone's standards and HPE will need to persuade shareholders that it's worth spending in this way.

The Journal suggests that one of the big attractions for HPE is Juniper Networks' presence in artificial intelligence, highlighting in particular Juniper's Mist AI unit.

Given how much we have heard from HPE on the subject of AI and its growing importance for the firm's enterprise customer base, it's likely that Juniper's AI tools are part of its attraction. HPE is focusing heavily on cloud services now, and AI is becoming an integral part of that shift.

But there's clearly a much broader driver here. Juniper Networks has more strings to its bow than an AI platform; it too is working hard to build up its cloud business, for example. There are plenty of opportunities for scale and growth here. The question really is whether they justify a multi-billion-dollar purchase price.

The Journal notes that HPE's shares closed at $17.72 on Monday, taking its market cap to around $23 billion. Absorbing such a significantly-sized rival would be no mean feat.

The company has made big bets in the past, including the $13.9 billion acquisition of IT services firm Electronic Data Systems (EDS) in 2008 and the ultimately controversial $11 billion buy of software company Autonomy in 2011; it wrote down the value of the latter by almost $9 billion a year later, accusing it of inflating its own value and financial position, and ended up embroiled in a lengthy fraud case.

Both of those deals came before Hewlett-Packard moved to split itself in two in 2015, creating Hewlett Packard Enterprise, or HPE, to house its enterprise products and services operations.

Should HPE and Juniper Networks manage to reach agreement – and the Journal report seems to indicate that that is likely, albeit with the usual caveat that talks could still collapse – we're talking headline-hitting M&A for the start of 2024. This would be a big deal.