MWC 2015: HP to acquire Wi-Fi specialist Aruba Networks

Deal combines Aruba Networks’ leadership in wireless mobility solutions with HP’s strength in wired switching; move designed to enable HP to accelerate enterprise transition to converged campus network

MWC 2015: HP to acquire Wi-Fi specialist Aruba Networks

HP is to acquire Wi-Fi specialist Aruba Networks for approximately US$3 billion. Both companies’ boards of directors have approved the deal.

Aruba is a Sunnyvale-based industry leader in wireless networking with approximately 1,800 employees. The company had revenues of $729 million in fiscal 2014, and has reported compound annual revenue growth of 30% over the last five years.

Aruba boasts a highly regarded innovation engine and specialised sales, marketing and channel model, complementing HP’s leading networking business and go-to-market breadth. Together, HP and Aruba will deliver next-generation converged campus solutions, leveraging the strong Aruba brand. 

This new combined organisation will be led by Aruba’s CEO Dominic Orr, and Chief Strategy and Technology Officer, Keerti Melkote, reporting to Antonio Neri, leader of HP Enterprise Group. With this move, HP said it will be positioned to deliver both the innovation and global delivery and services offerings to meet customer needs worldwide.

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 Wi-Fi standard is critical in enabling this trend.

This new technology will support the faster speeds and access to cloud applications that end-users expect. Enterprises need comprehensive, integrated and secure networking solutions to help them transition legacy systems to the wireless edge.  The announcement yesterday (2 March 2015) directly addresses these market trends.

“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 CEO 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.” 

“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 solutions 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 that 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 $18 billion 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 US and other countries as well as other customary closing conditions.

On its website, Aruba outlined its views on the deal.

What was announced today (2 March 2015)?

  • Today we announced that Aruba Networks and HP have entered into a definitive agreement under which HP will acquire Aruba for $3 billion in equity value.
  • Together, HP and Aruba will deliver converged wired and wireless solutions, leveraging the strong Aruba brand.
  • Upon close, Aruba will become a subsidiary of HP.
  • The new combined organization will be led by Aruba Networks CEO Dominic Orr and co-founder Keerti Melkote.
  • Dom and Keerti’s philosophy is to continue investing in open systems and multivendor policy management and network management.

Why is HP acquiring Aruba?

  • The two companies are highly complementary. Aruba boasts a highly regarded innovation engine and specialized sales, marketing and channel model, complementing HP’s leading networking business and broad go-to-market.
  • Combining Aruba and HP will create a leader in enterprise mobility, positioning HP to accelerate the enterprise transition to a converged wired/wireless campus network leveraging the Aruba brand.

How will Aruba fit into HP? What will the new organizational structure look like?

  • After the transaction closes, Aruba will combine with the HP Networking business within HP’s Enterprise Group organization, led by Dominic Orr and Keerti Melkote.
  • HP will retain Aruba’s strong culture, including the Airheads Community, specialized sales focus on mobility solutions, and innovative development team.

Why HP?

  • HP has complimentary strengths that we believe can help the new combined organization, led by Dominic Orr and Keerti Melkote, to be a pre-eminent competitor, and increase value to our customers and partners.
  • HP’s leading switching business will expand our opportunity to deliver wireless + wired solutions to the market.
  • HP’s global channel reach allows us to significantly expand into the SME market.
  • HP’s Global 2000 relationships and professional services offerings will accelerate our ability to penetrate these coveted accounts.
  • We will be able to significantly increase investments in demand generation across segments.
  • HP will retain Aruba’s strong culture, including the Airheads Community, specialized sales focus on mobility solutions, and innovative development team.

When do you expect this transaction to close?

  • The transaction is expected to close between May 2015 and Oct 2015, subject to customary closing conditions.

Why now?

  • This is an exciting combination of strengths that provides us the opportunity to drive significant value for our employees, customers, partners and shareholders.
  • Thanks to our collective accomplishments, we now have a tremendous opportunity with HP to become an even greater force in enterprise networking and enterprise mobility solutions.
  • 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.

Why is this acquisition a good thing for Aruba’s customers?

  • Same Aruba… but even faster and with greater resources – Our customers will continue to benefit from Aruba’s industry-leading innovation engine, our ‘customer first, customer last’ culture and our exceptional customer support. We anticipate that we will accelerate the pace of our innovation following the transaction, leveraging the combined R&D engineering expertise, budgets and resources of Aruba and HP.
  • Broader portfolio – We expect Aruba customers will have access to a broader portfolio of networking products in the future.
  • Flexibility and choice – Aruba and HP share a vision of open system networking, with compatible solution components rather than proprietary systems that lead to vendor lock-in. ClearPass and AirWave’s multi-vendor support capabilities give customers and partners complete freedom to select their wired and wireless infrastructure vendor (or vendors).
  • Global reach – Following the transaction, Aruba customers will be able to leverage HP’s global resources (including global service delivery), systems integrators and channel partners throughout the world.

Why is this acquisition a good thing for Aruba’s partners?

  • HP values our partners – One of the main reasons HP is acquiring Aruba is because of the unmatched expertise of our world-class partner community. HP understands how critical our partners have been to our success and is committed to extending and deepening those relationships.
  • Same Aruba… but even faster – Our partners will continue to benefit from Aruba’s industry-leading innovation engine, our ‘customer first, customer last’ culture and our highly specialized partner programs. We anticipate that we will accelerate the pace of our innovation following the transaction, leveraging the combined resources of Aruba and HP.
  • Awareness and demand generation – Partners will benefit from HP’s go-to-market resources and ability to drive awareness of the Aruba brand and generate new customer demand for our partners – including leads from HP’s professional services organization.
  • Broader portfolio – We expect Aruba partners will have access to a broader portfolio of networking products in the future, enabling you to establish more strategic relationships with your existing customers.
  • Flexibility – We intend to maintain our support for multiple wired and wireless infrastructure vendors through ClearPass and AirWave, giving our partners the flexibility to design solutions that best match your customer requirements.
  • High-level account access – We expect that our partners will be able to leverage HP’s higher-level strategic relationships to gain increased access to global corporations and large enterprises.

 

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