HP will buy Aruba to bolster its wireless networking business

The $2.7 billion deal will allow HP to take advantage of businesses with increasingly mobile employees

Hewlett-Packard will purchase Aruba Networks to boost its wireless networking business, the companies have announced.

HP will offer $US24.67 per share, giving Aruba a $US3 billion value. The deal is worth $US2.7 billion taking into account Aruba's debt and cash.

By buying Aruba, HP will be able to help businesses beef up their wireless networks to meet the demands of an increasingly mobile workforce, the companies said.

This is HP's first major acquisition since CEO Meg Whitman announced last year that the company would split into two. One half will focus on enterprise products and the other well sell printers and PCs.

Whitman recently said that HP can make acquisitions despite the company's troubled finances. Last week HP lowered its financial outlook for fiscal 2015 after reporting that revenue and profit decreased in the first quarter. During that quarter, HP's networking sales fell 11 per cent, compared to the year-ago period.

Aruba's sales, by contrast, are increasing. The company's 2014 revenue totalled $US729 million and was on track to break $US1 billion by 2017, according to analysts. Rumours of the deal emerged last week.

The networking gear vendor will join the HP Enterprise group, with Aruba CEO, Dominic Orr, and CTO, Keerti Melkote, staying on to lead the new organisation.

The boards of both companies have approved the deal, which is expected to close in the second half of HP's fiscal year. US government regulators and Aruba shareholders must also clear the acquisition.

Fred O'Connor writes about IT careers and health IT for The IDG News Service. Follow Fred on Twitter at @fredjoconnor. Fred's e-mail address is fred_o'connor@idg.com

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Tags business issuesNetworkingAruba networksMergers and acquisitionsHewlett-Packard

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