About a year ago in January, 2024, HPE and Juniper, offered a new year present to the global Core Tech Community i.e. announcement of a marriage, more aptly an acquisition, that would vault the couple (more aptly HPE) to a more enviable status in the industry and prodigiously enrich shareholders of Juniper. Read the story here https://www.caspian-services.com/post/hpe-juniper-blackrock-gip-nigeria-its-citizens
The deal value was $14b and was expected to be consummated late 2024 or January 2025 after obtaining all regulatory nods!
Well, here we are in February, 14, 2025 and finally, the deal has been…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
BLOCKED!
BY WHOM? WHY?
On the 30th of January, 2025, the United States Department of Justice (DoJ) filed a suit in the Northern District of California, to block the deal, citing the potential elimination of fierce competition between the companies that manufacture and sell Wireless Local Area Network devices (WLAN), including HPE and Juniper, which are the 2nd and 3rd largest providers of WLAN technology respectively.
It went on to allege that the deal could also lead to price increases, lesser innovation and reduction of choices of WLAN provider for several American businesses and institutions.
Of all the products and technologies offered by both HP and Juniper, why is WLAN so important to DoJ?
With the increasing adoption of cloud networking/storage by many organisations, access to which is via the interent, WLAN Access Points, WLAN controllers plus attendant software, powered by Artificial Intelligence (AI) have become hotcake! They serve as the gateways between users devices (PC, tablets, phones), merchants' POS terminals, IoT enabled appliances etc AND the internet (cloud).
The DoJ believes that there are three main players in this space vis: Cisco (market leader), HPE and Juniper. The acquisition will reduce the number to two and believes it will thus immensely lessen competition and increase prices.
It is concerned that many small business and critical institutions such as hospitals, schools and consumer products' retailers may have to cough out more to acquire WLAN technology, which may negatively affect their budgets, and in turn, their service delivery and ultimately, the economy.
Is the DoJ’s position justifiable?
The aforementioned rapid adoption of cloud services has opened up vast opportunities in WLAN. Core Tech American companies required no invitation to take advantage. Consequently, the US is home to several reputable WLAN technology providers such as Extreme Networks, Cisco, HPE, Juniper, (oops, already more than 3), Commscope (Ruckus), Fortinet, Ubiquiti, Arista Networks, Nile etc.
Does the DoJ believe Cisco and HPE/Juniper will squeeze others out of the market?
That may be tough to accomplish.
Extreme Networks, for instance, makes arguably the best WLAN Access Points (APs) in the industry. So says Gartner and many industry experts.
Extreme Networks has been named six times as a leader in WLAN in Gartner’s Magic Quadrant.
Extreme Networks led introduction of WiFi 7 Access Points which operate on the 6GHz spectrum and are designed to support high-bandwidth, latency-sensitive applications and IoT devices – creating a more effective way for enterprises to modernize and manage operations. The AI for IT Operations (AIOps) enables elimination of the need for manual configuration and troubleshooting, which are effortlessly managed by its cloud-based ExtremeCloud IQ.
Many customers in the US and across the world are turning to the leaders i.e. Extreme Networks, Huawei, Fortinet etc for their APs.
This begs the question: Why is the DOJ just filing this suit after a year and at the tail end of the deal’s gestation period? Is this move rooted in Utilitarianism or Altruism? Does anyone stand to benefit from this timing? Find out below….
Expectedly, HPE and Juniper have expressed disappointment with the filing, expressed it as flawed and vowed to defend it to the best of its legal ability. Indeed, HPE, in its 21-page response, asserted that blocking the deal is what will in fact have the effect the DoJ claimed i.e. eliminate fierce competition.
How?
HPE claimed Cisco will be the one to benefit if the deal is blocked.
Cisco is credited with a WLAN market share of circa 50% for the past 10 years. HPE therefore claimed cisco has never faced fierce competition but will do so from the imminent enlarged HP.
It also threw the Huawei factor into its defence i.e. the DoJ's lawsuit, if successful, will impede potential competition with Huawei, which is considered a national security risk by the US government, and thus damage the USA's declared objective of reducing the use of Chinese technology in critical infrastructure across the globe.
Who will win: DOJ or HPE/Juniper?
If recent history (Tmobile’s acquisition of Sprint) is anything to go by, the Huawei factor may swing the duel in favour of HPE, especially with Donald Trump sitting in the big chair.
Should HPE/Juniper get the short end of the stick, it could expose HPE to several risks that could negatively affect her reputation, stock price and bottom line. For example, there is the potential to pay $815m to Juniper if this acquisition is terminated.
What do you think will be outcome of this case?
Please leave your comments below.
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