Proving the Business Case for the Internet of Things

HP to buy Aruba Networks for $3bn

Steve Rogerson
March 11, 2015
 
Hewlett-Packard has agreed to buy Sunnyvale-based Aruba Networks for US$3bn to combine Aruba’s wireless mobility products with HP’s wired switching portfolio as part of its push into the IoT market.
 
The purchase agreement is$24.67 per share in cash. The equity value of the transaction is approximately $3bn, and net of cash and debt approximately $2.7bn. Both companies' boards of directors have approved the deal.
 
Aruba specialises in wireless networking with approximately 1800 employees. The company had revenues of $729m in fiscal 2014, and has reported compound annual revenue growth of 30 per cent over the past five years.
 
Aruba has an innovation engine and specialised sales, marketing and channel model, complementing HP's networking business and go-to-market breadth. Together, HP and Aruba aim to deliver next-generation converged campus systems. This combined organisation will be led by Aruba's chief executive officer Dominic Orr and chief strategy and technology officer Keerti Melkote, reporting to Antonio Neri, leader of HP’s enterprise group.
 
"Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT," said Meg Whitman, chairman, president and chief executive officer of HP. "By combining Aruba's world-class wireless mobility solutions with HP's leading switching portfolio, HP will offer the simplest, most secure networking solutions to help enterprises easily deploy next-generation mobile networks."
 
With the shift to mobile, enterprise networking needs are exceeding the capabilities of legacy infrastructure. At the same time, organisations are shifting rapidly to mobility-centric workplaces for their employees, guests, customers and students. The next-generation 802.11ac Wifi standard is critical in enabling this trend. This technology will support the faster speeds and access to cloud applications that end-users expect. Enterprises need comprehensive, integrated and secure networking to help them transition legacy systems to the wireless edge. Today's announcement aims to address these market trends.
 
"Together with HP, we have a tremendous opportunity to become an even greater force in enterprise mobility and networking," said Orr. "This transaction brings together Aruba's best-of-breed mobility hardware and software with HP's leading switching portfolio. In addition, Aruba's channel partners will have the opportunity to expand their businesses with HP offerings. Together, we will build on Aruba's proven 'customer first, customer last' culture, creating an innovative, agile networking leader ideally positioned to solve our customers' most pressing mobility, security and networking challenges."
 
HP and Aruba believe by combining complementary product portfolios and go-to-market approaches they will be able to accelerate revenue growth and strengthen the financial performance of the combined HP networking business, and create a leading competitor in the $18bn and growing campus networking sector.
 
Overall, HP expects the acquisition to be accretive to earnings in the first full year following close. The transaction is expected to close in the second half of HP's fiscal year 2015, subject to Aruba stockholder approval, regulatory approvals in the USA and other countries as well as other customary closing conditions.