Hewlett-Packard Co (HP) is buying wireless networking company Aruba Networks Inc for about US$2.7 billion, in what amounts to HP’s first major acquisition since its disastrous purchase of British software maker Autonomy Corp PLC in 2011.
Aruba, based in Sunnyvale, California, makes Wi-Fi networking systems for shopping malls, corporate campuses, hotels and universities. Its business has grown as more people are using mobile devices at work, school and elsewhere. Aruba may help HP capitalize on that trend, which has cut into sales of traditional HP products such as desktop computers.
The deal could also help HP compete with tech rivals such as Cisco Systems Inc and gain new access to Asian markets, particularly in China.
Cisco currently sells about half of all commercial wireless networking gear worldwide, UBS analyst Amitabh Passi said. He estimated that HP and Aruba combined would account for 20 percent of global sales for such systems.
HP is seeking to expand its tech portfolio for business customers at a time when it is preparing to split into two companies — one focused on selling computer systems and software to businesses, and the other selling PCs and printers.
That is part of HP chief executive Meg Whitman’s plan for confronting a recent decline in sales.
Buying Aruba gives HP “a faster growing, higher margin business that fills a portfolio need without ‘betting the ranch,’” Bernstein analyst Toni Sacconaghi wrote in a note on Monday.
With the Aruba deal, HP is paying US$24.67 in cash for each Aruba share. Boards of both companies have approved the deal, which they said would be worth about US$3 billion after factoring in cash and debt on Aruba’s balance sheet. Aruba had US$729 million in sales last year.
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