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HP to Grow Networking Business Through Aruba Networks Acquisition

In its first major transaction since announcing plans to split itself into two last year, Hewlett-Packard agreed to buy Aruba Networks on March 2, 2015. ((Michael J. de la Merced, HP to Buy Wi-Fi Equipment Maker Aruba Networks for About $3 Billion, N.Y. Times (Mar. 2, 2015), http://www.nytimes.com/2015/03/03/business/dealbook/hp-to-buy-wi-fi-equpment-maker-aruba-networks-for-about-3-billion.html?_r=1.)) 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. ((Samantha Sharf, HP to Buy WiFi Provider Aruba Networks for $3 Billion, Forbes (Mar. 2, 2015, 10:13 AM), http://www.forbes.com/sites/samanthasharf/2015/03/02/hp-to-buy-wifi-provider-aruba-networks-for-3-billion/.))

Aruba Networks, based in Sunnyvale, California, specializes in wireless networking access point hardware and software. ((De la Merced, supra note 1.)) Aruba provides mobile networks to universities, hospitals, malls and corporations. ((Sharf, supra note 2.)) The 13-year-old “help[s] businesses engage #GenMobile with exactly what they need, at exactly the right time, no matter what the device or location.” ((Aruba Networks, http://www.arubanetworks.com/company/about-us/ (last visited Mar. 3, 2015).)) “Aruba’s annual sales are projected to grow to more than $1 billion by fiscal 2017, the average of eight analysts’ estimates compiled by Bloomberg show, from $729 million in the year through July.” ((Jack Clark, Hewlett-Packard Agrees to Buy Aruba Networks for $2.7 Billion, Bloomberg Bus. (Mar. 2, 2015, 8:47 AM), http://www.bloomberg.com/news/articles/2015-03-02/hewlett-packard-agrees-to-buy-aruba-networks-for-2-7-billion.))

Through the acquisition of Aruba Networks, HP aims to grow its networking business as smartphones, tablets and other connected devices continue to proliferate. ((De la Merced, supra note 1.)) Meg Whitman, HP’s chairman and chief executive, said in a statement that “[e]nterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of I.T. . . . 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.”3 ((Id.))

Under the terms of the agreement HP is offering $24.67 a share, a 1 percent discount to Aruba Network’s close on February 27, when the stock reached the highest level in nearly two years following a report about a possible deal. ((Tess Stynes, H-P to Buy Aruba Networks for $2.7 Billion, Wall St. J. (Mar. 2, 2015, 10:43 AM), http://www.wsj.com/articles/hewlett-packard-to-buy-aruba-networks-1425303619.)) The price represents a roughly 34 percent premium to Aruba’s closing price on February 24, the day before Bloomberg News reported the merger discussions between the two ((De la Merced, supra note 1.)) Including cash and debt, the companies valued the deal at roughly $3 billion ((Stynes, supra note 9.)) This deal is HP’s largest in more than three years ((De la Merced, supra note 1.))

Both companies’ boards have approved the deal, ((Stynes, supra note 9.)) which is expected to close by October 31, pending approval by regulators and Aruba’s shareholders. ((De la Merced, supra note 1.))

Once the deal closes Aruba will operate as a subsidiary of HP. ((Sharf, supra note 2.)) Aruba will continue to do business under its own brand and will be led by its chief executive, Dominic Orr. Mr. Orr will report to the head of HP’s enterprise group, Antonio Neri ((De la Merced, supra note 1.)) Aruba will then become a part of Hewlett-Packard Enterprise after the company splits ((Sharf, supra note 2.))

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