Juniper Networks, Inc. JNPR and Hewlett Packard Enterprise HPE are facing a lawsuit filed by the U.S. Department of Justice (DOJ) in the Northern District of California to prohibit HPE’s proposed acquisition of Juniper.

Background

In early 2024, HPE entered into a definitive agreement with Juniper to acquire the latter for approximately $14 billion in equity value. The strategic move involves integrating Juniper's comprehensive range of cloud-based networking solutions, software and services, including Mist AI with HPE Aruba Networking and HPE AI interconnect. It will accelerate the development of secure, unified networking solutions optimized for hybrid cloud and AI. The buyout will also better equip the joint entity to fend off the growing competition from other industry leaders, such as Cisco Systems. The proposed merger has secured approval from several antitrust regulators, including the European Commission and the U.K. CMA.

DoJ’s Concern Regarding the Acquisition

HPE and Juniper are the second and third largest WLAN (Wireless Local Area Network) solution providers in the market, following Cisco Systems. WLAN technology is a critical component of the modern digital workplace. Education institutes, hospitals, retail shops, and small and large businesses across industries are heavily dependent on wireless networks for their daily operations. U.S. Department of Justice claims completion of the acquisition will eliminate competition in the market. This will reduce innovation and lower the number of options, and American businesses may be hit by higher prices and lower quality.

The Acquisition Will Foster Fair Competition and Drive Innovation

Juniper and HPE have put forward several arguments to defend the merger on several grounds. JNPR and HPE have claimed WLAN is a highly competitive market, and with the recent industry-wide shift toward AI and cloud-driven technologies, barriers to entry have decreased, and competition has further intensified. Juniper and HPE have also pointed out that there are at least eight competitors in the market, and some of them have substantial financial resources with significant market share. Cisco Systems holds more than 50% of the market share. 

Hence, the acquisition will create a stronger competitor and promote healthier competition in the market. It will combine JNPR and HPE’s complementary capabilities and create a robust AI-driven, cloud-native networking portfolio to match the evolving connectivity needs of businesses.

JNPR & HPE Merger is Vital for U.S. National Security

Advanced networking solutions are a vital component in large-scale compute, semiconductors, quantum-secure communication and 6G technologies. Hence, a strong core technology infrastructure is essential for U.S. national security and reducing reliance on foreign tech. HPE and JNPR merger will serve that purpose by creating a strong U.S.-based networking company and strengthening the American core tech sector.

Will This Development Impact JNPR’s Share Performance?

Juniper share price fell by 1.4% following the lawsuit filed by U.S. DoJ. However, as DOJ has not provided any evidence of customer complaints, Juniper and HPE remain optimistic about the completion of the transaction. Moreover, the buyout proposal has secured unconditional approval from regulators in 14 jurisdictions. These factors might work in favor of Juniper and HPE during court proceedings.

JNPR Stock’s Price Movement

Shares of Juniper have declined 6% in the past year against the industry’s growth of 34.2%.

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JNPR’s Zacks Rank and Key Picks

Juniper currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks that investors may consider.

Keysight Technologies, Inc. KEYS has a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications, and rising adoption of driver-assistance systems globally.

Zillow Group, Inc. ZG carries a Zacks Rank #2 at present. In the last reported quarter, it delivered an earnings surprise of 9.38%. ZG delivered an earnings surprise of 25.47%, on average, in the trailing four quarters. The company is witnessing solid momentum in rental revenues, driven by growth in multi and single-family listings, which is a positive factor.

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