Report from Bloomberg
In Brief – In its first major merger action since the beginning of the second Donald Trump Administration, the US Department of Justice (DoJ) has sued to block the $14 billion acquisition of Juniper Networks by Hewlett Packard Enterprise (HPE). The DoJ’s complaint, filed in federal court in California, argues that the deal would combine the second and third largest competitors in the WLAN (Wireless Local Area Network) market for networking gear used by large enterprises and leave the top two WLAN providers, Cisco Systems and HPE, with 70% of the US market. The DoJ extensively cited internal HPE communications over years detailing the competitive pressure from Juniper, with HPE shifting strategy in 2024 from beating the growing rival to acquiring the competitor, as well as providing market share analysis that the agency claims show the acquisition violating traditional anticompetitive thresholds. In a joint statement, HPE and Juniper said the Justice Department’s analysis was “fundamentally flawed”, ignores “well capitalized competitors in the US”, and that they will defend the acquisition in court. The reported walk-away date for the deal is in October, which should allow time for an initial court ruling.
Context – The aggressive antitrust agenda of the Biden Administration contributed to some high-profile opposition in the business and M&A communities, especially in high tech. Despite the new administration including several economic populists that are very critical of the largest digital giants, led by Vice President Vance and some top officials at the enforcement agencies, there has been widespread belief that antitrust enforcement would moderate some, at least beyond the treatment of the biggest of Big Tech. Therefore, this acquisition challenge, which began during the previous administration, is seen as a potentially important signal. However, don’t miss the China angle. While the EU and the UK enforcers cleared the acquisition last year, there has been less concern with China-sourced network gear in Europe than in the US, and Huawei is a top WLAN competitor that the DoJ will likely want to remove from US market share considerations.