Hewlett Packard Enterprise (HPE) is currently facing regulatory scrutiny in the United Kingdom over its planned acquisition of Juniper Networks. The U.K.’s Competition and Markets Authority (CMA) has launched a formal “phase 1” investigation to determine if the deal will result in a substantial lessening of competition in the U.K. market for goods or services.
The acquisition between HPE and Juniper Networks was announced in January with the intention of combining their strengths in networking and IT infrastructure. This partnership would span various areas such as servers, storage, consulting, routing, switching, and security. One of the main drivers behind this merger is the desire to accelerate AI-driven innovation, as cloud infrastructure plays a crucial role in advancing the AI movement.
To secure the deal, HPE offered $40 per share, which represented a 32% premium over Juniper Networks’ most recent closing price. The total value of the acquisition amounted to $14 billion. Given the size and significance of the deal, regulatory scrutiny was expected. The U.K. is the first jurisdiction to initiate an investigation, but it is likely that the European Commission and the Federal Trade Commission (FTC) in the U.S. will also scrutinize the deal.
This is not the first time a major acquisition has faced challenges from regulators. Last year, Adobe had to abandon its $20 billion bid for Figma due to pushback from both the European Union and the U.K.
The CMA has invited relevant stakeholders to submit their comments on the HPE-Juniper Networks deal by July 3. After reviewing these comments, the CMA will have until August 14 to decide whether to proceed with a formal “phase 2” inquiry.
Overall, this investigation highlights the importance of regulating mergers and acquisitions to ensure fair competition in the market. As technology companies seek to consolidate their strengths and drive innovation, it becomes crucial for regulatory bodies to assess the potential impact on competition and consumer welfare. The outcome of the CMA’s investigation will not only impact HPE and Juniper Networks but also set an important precedent for future deals in the industry.
