Seeking to bolster its sagging enterprise networking portfolio, HP has swung a deal to acquire Aruba Networks for close to $3 billion in cash.
HP Inc. (NYSE: HPQ) announced the acquisition of Aruba Networks Inc. (Nasdaq: ARUN), a maker of WiFi access equipment, Monday morning in a move sure to generate much buzz at the Mobile World Congress conclave in Barcelona this week. Both companies' boards of directors have approved the transaction, which was first reported by Bloomberg last week and is expected to close by the end of October. (See HP in Talks to Buy Aruba – Report.)
The deal is the first for HP since it disclosed plans to split into two separate entities, one for its legacy personal computing and printing business and the other for its newer networking, storage and software business. Aruba Networks will become part of the second entity, with its CEO Dominic Orr and Chief Strategy and Technology Officer Keerti Melkote reporting to Antonio Neri, head of the new HP Enterprise Group.
HP Chairman and CEO Meg Whitman, who will run the new HP Enterprise entity once the split occurs, said the deal will combine "Aruba's world-class wireless mobility solutions with HP's leading switching portfolio," enabling the new HP Enterprise unit to "offer the sharpest, most secure networking solutions to help enterprises easily deploy next-generation mobile networks." With HP floundering in the enterprise networking market, Whitman had vowed to get more aggressive by making acquisitions.
In buying Aruba, HP is clearly getting a rising star in the mobile networking systems market. Based in Sunnyvale, Calif., Aruba specializes in developing WiFi access point hardware and software for hotels, universities and shopping malls. The publicly traded company is rapidly growing, reporting revenues of $729 million in fiscal 2014, which ended last July 31.
Aruba has also started turning a profit in recent months. The company reported last Thursday that it generated record revenues of $212.9 million in its fiscal 2015 second quarter, which ended January 31, up 21% from $176.4 million a year earlier. It reported net income of $5.7 million, or $0.05 per diluted share, reversing loss of $10.7 million, or $0.10 per share, in the year-ago period.
— Alan Breznick, Cable/Video Practice Leader, Light Reading