South Africa Approves HPE’s R252-Billion Deal to Acquire Juniper Networks

The South African Competition Commission has given the green light to Hewlett Packard Enterprise’s (HPE) R252-billion acquisition of Juniper Networks, a deal initially announced in January 2024. This transaction strengthens HPE’s networking business significantly.

The deal, valued at R252 billion, represents over half of HPE’s total market value of R378 billion, with HPE agreeing to pay a 32% premium over Juniper’s January 2024 stock price. This acquisition will position HPE to compete more effectively in the global networking space, particularly against its rival Cisco, both of which have significant operations in South Africa.

Approval by South African Competition Commission

South Africa’s Competition Commission gave its approval to the acquisition without any conditions. In a statement, the Commission confirmed:

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

In South Africa, HPE controls Hewlett-Packard South Africa Proprietary Limited and has a significant presence through its financial services arm. This acquisition will enable HPE to expand its networking operations in the region, adding Juniper’s expertise and product lines to its existing offerings.

The Strategic Value of the Deal

For HPE, this acquisition marks a strategic shift as it attempts to move away from stagnating revenue growth. Despite efforts to expand high-performance computing and cloud services, the company has only managed growth of around 2% in recent years. HPE’s CEO, Antonio Neri, emphasized that this deal will double HPE’s networking business once the deal is completed in late 2024 or early 2025.

Neri noted that the combination of HPE and Juniper Networks will provide a “modern option” for networking clients, challenging Cisco’s long-standing dominance. He remarked:

“We are creating a second option, a much more modern option, that customers have been looking for.”

Financial Aspects and Completion Timeline

HPE plans to finance this deal through a combination of term loans, new debt, convertible preferred securities, and cash. The company expects to finalise the transaction by early 2025, with necessary approvals already obtained in the UK.

The acquisition is seen as a significant boost to HPE’s ambitions to become a more formidable player in the networking world, and South Africa’s approval is a critical step in closing the deal.

Industry Impacts

This deal will likely reshape the competitive landscape, particularly in South Africa, where Cisco and Juniper both operate. The entry of a combined HPE-Juniper force might spark further innovation and options for local businesses seeking advanced networking solutions. South African companies will benefit from increased choice, competitive pricing, and access to modern networking technology.

Final Steps

With the approval from the South African Competition Commission and the UK’s antitrust watchdog, HPE is moving closer to completing the acquisition. A spokesperson for the company said:

“We will continue working to complete all necessary remaining reviews and secure additional clearances quickly and efficiently.”

The world of networking in South Africa and beyond is on the verge of a major shake-up with this high-stakes merger.