By Tess Stynes
Hewlett-Packard Co. agreed to acquire wireless-networking
company Aruba Networks Inc. in a deal valued at roughly $2.7
billion, expanding H-P's capabilities in the mobile market.
H-P is offering $24.67 a share, a 1% discount to Aruba Network's
close on Friday, when the stock reached the highest level in nearly
two years following a report about a possible deal. Including cash
and debt, the companies valued the deal at roughly $3 billion.
H-P Chairman and Chief Executive Meg Whitman said the deal will
combines Aruba's wireless mobility solutions with H-P's switching
portfolio, allowing the company to offer most secure networking
solutions to help enterprises easily deploy next-generation mobile
networks.
Cantor Fitzgerald analysts said the planned acquisition
complements H-P's networking portfolio, given H-P's bigger push
into the networking market over the past few years, which included
the $2.7 billion acquisition of 3Com Corp. in 2010, the analysts
think the planned acquisition complements H-P's networking
portfolio. However, Cantor also thinks H-P's capital would be
better spent on cloud and Big Data software-related vendors.
Analysts at Mizuho Securities USA Inc. added that despite
Aruba's strong revenue growth, the deal was unlikely to solve
growth issues within H-P, and the firm estimated that Aruba's
potential revenue contribution would represent less than 2% of H-P
Enterprise's overall revenues.
Sunnyvale, Calif.-based Aruba Networks reported revenue of $729
million in fiscal 2014.
The H-P and Aruba operation will be led by Aruba Chief Executive
Officer Dominic Orr and Chief Strategy and Technology Officer
Keerti Melkote. They will report to Antonio Neri, head of H-P
Enterprise Group.
Both companies' boards of directors have approved the deal.
Hewlett-Packard in October unveiled plans to separate its
personal-computer and printer businesses from its corporate
hardware and services operations, which has been billed as the
growth engine.
H-P's strong market position in corporate hardware such as
computer servers and personal computers hasn't helped it in newer
areas like cloud software and mobile computing, where the company
remains largely irrelevant. Sales fell in its software segment,
which is supposed to be a future growth engine for the company--an
emblem of H-P's tough market position.
Write to Tess Stynes at tess.stynes@wsj.com
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