Department of Justice Blocks HPE’s Acquisition of Juniper

The U.S. Department of Justice (DOJ) has filed a lawsuit to block Hewlett Packard Enterprise’s (HPE) proposed $14 billion acquisition of Juniper Networks, citing concerns over reduced competition in the enterprise wireless local area network (WLAN) market. The DOJ’s complaint, filed in the Northern District of California, argues that the merger would eliminate direct competition between two of the three largest WLAN providers in the U.S., leading to higher prices, reduced innovation, and fewer choices for businesses and institutions.

The lawsuit highlights Juniper’s rapid growth in the enterprise WLAN sector, where it has challenged HPE with aggressive pricing and technological advancements. Internal HPE communications referenced in the complaint suggest the company viewed Juniper as a significant competitive threat. If the acquisition proceeds, the DOJ contends that the U.S. WLAN market would become further consolidated, with post-merger HPE and Cisco Systems controlling over 70% of the sector.

• DOJ concerns: The merger would eliminate competition between HPE and Juniper, increasing market concentration.

• Market impact: The DOJ claims the deal would lead to higher costs and reduced innovation in WLAN technology.

• HPE’s view of Juniper: DOJ claims internal documents suggest HPE considered Juniper a major threat and sought to counter its market influence.

• Current market structure: Post-merger, HPE and Cisco would dominate the U.S. enterprise WLAN market.

• Legal basis: The DOJ argues the deal violates Section 7 of the Clayton Act by substantially reducing competition.

“The threat this merger poses is not theoretical. Vital industries in our country—including American hospitals and small businesses—rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers,” said Acting Assistant Attorney General Omeed A. Assefi of the DOJ’s Antitrust Division.

• On January 10, 2024 Hewlett Packard Enterprise (HPE) officially announced plans to acquire Juniper Networks for $40.00 per share in cash, representing an equity value of approximately $14 billion and a 32% premium over the unaffected closing price of Juniper’s common stock on January 8, 2024. HPE said Juniper’s complementary portfolios supercharges its own edge-to-cloud strategy with an ability to lead in an AI-native environment based on a foundational cloud-native architecture. The combined company would target next-generation AI-native networking and enable new digital experiences through secure, intelligent connectivity. Networking will become the new core business and architecture foundation for HPE’s Hybrid Cloud and AI solutions delivered through our HPE GreenLake hybrid cloud platform. 

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