HP Acquires Aruba Networks
Hewlett-Packard has announced what is expected to be the first of several networking and cloud acquisitions this year, snapping up wireless networking specialist Aruba Networks Inc. in a bid to speed the transition to converged campus networks.
HP said Monday (March 2) the equity value of the deal is about $3 billion, including net of cash and debt totaling approximately $2.7 billion. The boards of both companies have approved the deal, HP said.
Aruba CEO Dominic Orr will head the new HP unit along with Kerrti Melkote, Aruba's chief strategist and technology officer. Both will report to Antonio Neri, head of HP's Enterprise Group.
HP said the deal is predicated on the assumption that legacy enterprise networks are being overwhelmed by the shift to mobile devices. The new HP unit will seek to leverage the emerging 802.11ac Wi-Fi standard that supports higher speeds and access to cloud applications.
HP is currently in the midst of a restructuring. HP CEO Meg Whitman stressed late last year the company would "double down" on infrastructure investments in the coming year with its enterprise unit serving as the focal point for its infrastructure push centering on converged IT, servers, storage, software-defined networking and a Helion cloud offering built on OpenStack.
The Aruba deal seeks to flesh out Whitman's blueprint for growth. The combination of Aruba’s wireless mobility technology with HP’s switching portfolio will allow the parent company to offer "secure networking solutions to help enterprises easily deploy next-generation mobile networks," Whitman said in a statement announcing the Aruba deal.
Aruba Networks, Sunnyvale, Calif., is focused on next-generation network access technologies, including a "mobility-defined network" designed to automate IT infrastructure optimization along with security features that previously required manual IT maintenance.
HP said the deal promises to strengthen the performance of its networking business as it targets a campus networking sector estimated to be an $18 billion market.
The transaction is expected to close during the second half of HP’s 2015 fiscal year 2015 and is subject to Aruba stockholder approval as well as U.S. and international regulatory approvals. HP also said it expects the Aruba deal to be accretive to earnings in the first full year after the deal is completed.
Aruba and Juniper Networks announced agreement in June 2014 to work on converged wired and wireless networks. The deal gave Aruba access to Juniper Networks' programmable silicon technology via software and APIs. The goal of the collaboration was to leverage open protocols and APIs on Juniper switches and routers.
The deal also aimed to leverage these capabilities on Aruba's enterprise wireless LAN portfolio.
Reaction to HP's acquisition of Aruba Networks was lukewarm. Some observers questioned the networking deal, saying HP should be focusing on acquisitions of cloud and big data vendors. Others noted that the Aruba would provide HP with only incremental revenue growth as the parent company completes its restructuring.
