HP to buy Wi-Fi equipment maker Aruba Networks in $2.4-bn deal

Hewlett Packard (HP) plans to acquire Aruba Networks Inc, a maker of Wi-Fi equipment, in $2.4-bn deal. Aruba makes wireless-network infrastructure used by hotels, universities and shopping malls, computing.co.uk reported citing people with knowledge of the matter said.

The deal would complement HP's own high-end networking equipment business as it looked to spin-off its PC and printers products business to focus on enterprise-grade products and services.

The deal has been valued at $2.4 billion. Aruba is a provider of Wi-Fi products and services targeted at particular vertical sectors, such as retail and healthcare. It saw a 29 per cent growth in revenue in its fiscal 2015 first quarter results, at $207.8 million.

However, HP's recent record of acquisitions had been less than encouraging with its 2008 acquisition of services company EDS for $13.9 billion coming just as the global financial market collapse started to weigh on outsourcing and software implementation budgets, followed by the rise of cloud computing, which had made trading difficult for all IT services companies.

Its $11.7 billion acquisition of Autonomy turned out to be a huge embarrassment, with HP accusing Autonomy's former management of engaging in accounting fraud and the company writing off $8.8 billion in value as a result in 2012. Oracle founder Larry Ellison had earlier shrugged off a takeover of Autonomy for half the price that HP paid, claiming that it was over-valued.

The purchase announcement of the acquisition might come as soon as next week, said one of the sources who requested not to be named, as the information was private. However, the deal had not been concluded and talks could still fall through.

Aruba was up 21 per cent to $22.24 in New York trading on Wednesday, with the company gaining a market value of about $2.4 billion.

This will be the largest acquisition in several years for Hewlett-Packard, as chief executive officer Meg Whitman had been focused on cutting costs and returning the business to growth. Hewlett-Packard had plans to split itself in two later this year, with Whitman retaining charge of the business focused on corporate customers.

In an interview earlier this week, Whitman said Hewlett-Packard was now in a position where it could actually make acquisitions, which it could not when it started.