Monday HP announced that it will acquire WiFi provider Aruba Networks for $24.67 per share. The deal, which is expected to close in the second half of this year, is valued at $3 billion, or $2.7 billion net of cash and debt.
"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, CEO of HP in a statement on the deal. "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."
Shares of HP opened in the green Monday at $34.92 but just barely. The stock is still down more than $3 since it announced weak first quarter earnings and an even weaker outlook last week. HP is still up close to 16% over the last 12-months but down about 13% so far in 2015.
Hewlett-Packard - Stock Price (Past 30 Days) | FindTheCompany
Shares of Aruba opened down 1.6% at $24.42. It is somewhat unusual for an acquisition target to move lower on a merger announcement, but at $24.67 per share HP is buying Aruba at a discount to its Friday closing price. The stock, however, soared more than $6, over 30%, last week following a better than expected earnings report.
Aruba Networks Inc. - Stock Price (Past 30 Days) | FindTheCompany
Last Thursday Aruba reported $212.9 million in second quarter revenue, up 21% from a year earlier. It's adjusted net income was $22.8 million, or 30 cents per share beating Wall Street analysts' consensus by 3 cents. Last year the company had $729 million in revenue. The stock remains down from its peak in 2011.
In an FAQ on its website Aruba noted, "We are at an inflection point in our industry. The campus architecture has truly shifted to mobility-first. We have the opportunity to capitalize on this megatrend, but we need to gain critical mass in product portfolio and go-to-market and accelerate our ability to invest in broader solutions. This move allows us to do so."
Based in Sunnyvale, California, Aruba provides mobile networks to universities, hospitals, malls and corporations. The 13-year-old company describes itself as a bridge between businesses and "#GenMobile" which it says is "tech-savvy," "always mobile" and "love[s] WiFi."
Once the deal closes Aruba will operate as a subsidiary of HP and will become a part of Hewlett Packard Enterprise after the tech giant splits. The company's current chief executive and chief technology officer will continue to lead the group reporting to the current head of HP Enterprise Group.
