HP (Photo : Reuters)
Hewlett-Packard announced Monday that it will acquire WiFi equipment provider Aruba Networks for $2.7 billion, making it the biggest deal made by the world’s second-biggest PC maker since its controversial purchase of U.K.’s Autonomy Plc in 2011.
The deal, which is expected to close in at the second half of 2015, will see Aruba operating as a subsidiary under the Hewlett-Packard Enterprise, with the company's chief executive and chief technology officer leading the group reporting to the current head of the HP Enterprise Group.
"Enterprises are facing a mobile-first world and are looking for solutions that help them transition legacy investments to the new style of IT," HP CEO Meg Whitman said in a statement regarding the acquisition.
"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."
On its website, Aruba said that the company is on "an inflection point" in the industry.
"The campus architecture has truly shifted to mobility-first. We have the opportunity to capitalize on this megatrend, but we need to gain critical mass in product portfolio and go-to-market and accelerate our ability to invest in broader solutions. This move allows us to do so," the statement noted.
Analysts see HP's purchase of Aruba as a bid by the PC manufacturing giant to boost its standing in the wireless market, which is expected to grow by 40 percent to about $13 billion in 2019, as more companies are embracing the use of wireless devices to access work systems.
"I think it will add a layer of high-growth revenue to the mix in a way it helps HP reach its goal of growing faster," Josep Bori, an analyst with the equity research firm Atlantic Equities, told Reuters.
HP currently has a 4-5-percent share of the enterprise WLAN market, compared with Aruba's 10-13 percent.
The purchase will also help HP better compete for E-Rate, the biggest educational technology subsidy program in the U.S., which helps connect schools and public libraries to high-speed Internet, JMP Securities analyst Erik Suppiger said in an interview.
Earlier in December, the Federal Communications Commission voted to increase funding for the E-Rate program from $1.5 billion to $3.9 billion.
Based in Sunnyvale, California, Aruba provides mobile networks and equipment for clients including California State University and Dalian Wanda Group, China's biggest property developer and cinema chain.
