The Cloud

HP Buys Aruba Networks for 9% Premium

Hewlett-Packard spends a net $2.7 billion for the maker of hardware and software for enterprise mobile networks.
Katie Kuehner-HebertMarch 2, 2015
HP Buys Aruba Networks for 9% Premium

Hewlett-Packard has struck a deal to buy Aruba Networks for roughly $2.7 billion net of cash and debt, coming through on its promise to investors to continue to grow with more acquisitions.

The Palo Alto, Calif. company said Monday that it had bought Aruba, a Sunnyvale, Calif.-based provider of enterprise wireless LAN and edge access networking equipment. Together, HP and the publicly held Aruba would deliver “next-generation converged campus solutions,” HP said, with new technology that would support the faster speeds and access to cloud applications “that end-users expect.”

Hotels, universities, and shopping malls are the biggest users of Aruba’s wireless access point systems.

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“Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT,” Meg Whitman, HP’s chairman, president and CEO, said. “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.”

HP is offering $24.67 a share, a 1% discount to Aruba Network’s close on Friday, when news of a possible deal first circulated. Aruba shares had closed at $22.61 the previous day.

The combined unit would operate under the Aruba brand, to be led by Aruba’s current chief executive officer Dominic Orr, and chief strategy and technology officer, Keerti Melkote. Both would report to Antonio Neri, leader of HP’s enterprise group.

According to a Dow Jones Newswires story, analysts at Mizuho Securities USA said that despite Aruba’s strong revenue growth, the deal was unlikely to solve growth issues within HP, and the firm estimated that Aruba’s potential revenue contribution would represent less than 2% of HP Enterprise’s overall revenues.