HPE's multi-billion Juniper takeover could fall through

The planned takeover of network specialist Juniper by Hewlett Packard Enterprises (HPE) has received a setback: The US Department of Justice announced a lawsuit against the USD 14 billion takeover and wants to stop the deal. The Department argues that the merger of the two companies would hinder competition. However, HPE and Juniper have shown themselves to be combative and keen to continue with the takeover.

The Ministry of Justice argued that the takeover would eliminate competition, particularly in the WLAN environment, leaving only the two companies Cisco Systems and HPE. Both would then have more than 70 percent market share for network equipment in the USA.

This seems interesting from several points of view: Firstly, the 70 percent is likely to result from Cisco's already very high market share. Furthermore, according to HPE, the transaction has already been approved by antitrust authorities in 14 countries. These include the European Commission and the British regulatory authority CMA. The EU Commission was unable to identify any indications of potentially extensive restrictions of competition in the highly competitive business with devices such as routers and switches.

Excessive interpretation of antitrust laws?

HPE stated in its press release: "We believe that the Department of Justice's analysis of this acquisition is fundamentally flawed and we are disappointed with the decision to file a lawsuit seeking to enjoin the closing of the transaction." The company called the Department of Justice's interpretation of the antitrust laws overbroad and announced its strong opposition. Instead, the takeover would promote competition and innovation.

HPE and Juniper see complementary offers through the merger. They want to "compete more effectively with global, established companies due to the new size". They are probably alluding to Cisco and are also referring to the market share of an unnamed competitor of over 50 percent. HPE rejects the claim by the US Department of Justice that the WLAN market consists of only three main players.

In principle, the combination of the HPE and Juniper product portfolios would create a second networking giant and make the market exciting in terms of providers with a complete network provider of WLAN via switches, routers and firewalls. For reasons of support, some customers are likely to opt for overall responsibility from one manufacturer, which could make the potential combination of HPE and Juniper an interesting alternative.

(nen)