HPE, Juniper networks under scrutiny amid potential DOJ acquisition block

investing.com -- Hewlett Packard Enterprise Co (NYSE: HPE) and Juniper Networks Inc (NYSE: JNPR) came under pressure after reports indicated that the U.S. Department of Justice may move to block HPE’s pending acquisition of Juniper.

The approximately $14 billion deal, which has already received unconditional approvals from regulators in the EU, UK, India, South Korea, and Australia, remains under review by the DOJ. During HPE’s most recent earnings call, management indicated that the acquisition is expected to close in early 2025, a slight delay from initial expectations of late 2024.

The agreement includes termination fees on both sides, with Juniper liable for $407.5 million if the deal is terminated for a better offer, and HPE on the hook for $815 million if the acquisition fails.

If approved, the acquisition could add $0.05 per share, or about 2%, to HPE’s earnings in FY25, with potential longer-term EPS accretion of 10%. Analysts believe the focus will remain on whether the DOJ grants approval.

Despite the uncertainty, HPE’s fundamentals are seen as strong, with the company expected to benefit from gains in AI servers, a gradual recovery in x86 servers, and improvements in its storage and Intelligent Edge businesses over the longer term.

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