HPE Acquires Silver Peak for $925 Million

Acquisition Highlights and Customer Benefits:
• The combination of Aruba and Silver Peak will accelerate cloud transformation for enterprises with a comprehensive edge-to-cloud networking solution covering all aspects of wired, wireless LAN and WAN
• Silver Peak’s simple, intuitive ‘self-driving’ WAN delivers cost savings while maintaining application performance for rapid business recovery in a post Covid-19 world
• It complements Aruba’s existing work from home and branch office solutions to deliver one of the industry’s most comprehensive portfolios designed to securely connect any edge to any cloud
• Establishes end-to-end leadership with a comprehensive, secure networking portfolio in growing market for campus, data center, branch and remote worker locations

Hewlett Packard Enterprise entered into a definitive agreement to acquire Silver Peak Systems, Inc., an SD-WAN (Software-Defined Wide Area Network) leader, in a transaction valued at $925 million.

Silver Peak will be combined with HPE’s Aruba Networks business unit and will extend Aruba’s technology leadership in the large and growing SD-WAN space.

“HPE was an early mover in identifying the opportunity at the edge and that trend is accelerating in a post-COVID world,” said Antonio Neri, president and CEO, HPE. “With this acquisition we are accelerating our edge-to-cloud strategy to provide a true distributed cloud model and cloud experience for all apps and data wherever they live. Silver Peak’s innovative team and technology bring critical capabilities that will help our customers modernize and transform their networks to securely connect any edge to any cloud.“

Silver Peak’s SD-WAN offerings are complementary and strengthen Aruba’s Edge Service Platform (ESP). By combining Silver Peak’s SD-WAN with Aruba’s SD-Branch solutions customers can simplify branch office and WAN deployments to empower remote workforces, enable cloud-connected distributed enterprises, and transform business operations without compromising quality or reliability.

“Today’s announcement comes at a unique moment for our customers, who are grappling with business recovery in the wake of the pandemic,” said Keerti Melkote, president of intelligent edge, HPE, and founder of Aruba. “The need for edge-to-cloud architectures has never been more relevant as enterprises look to extend connectivity to branch locations and enable secure work-from-home experiences. Silver Peak’s technology transforms legacy WAN architectures to self-driving WANs, which is a perfect fit with Aruba’s cloud-native, AI-driven edge services platform. Together, we will be able to meet these needs with critical connectivity, security, and AI capabilities to drive the next gen of edge-to-cloud transformation.“

Leader in SD-WAN and WAN Optimization Technologies
Silver Peak is a leader in the SD-WAN market with more than 1,500 production SD-WAN customers around the world. The company helps enterprises and service providers quickly migrate to secure enterprise-grade SD-WAN connectivity, while improving application performance and lowering connectivity costs. Powered by Silver Peak’s SD-WAN edge platform, customers can achieve dedicated WAN-like performance while running all cloud applications and services via broadband access. Silver Peak also enables freedom of choice to leverage best-in-class technologies from a broad range of ecosystem partners, particularly those focused on security. Silver Peak is one of 2 leaders recognized in the Gartner, Magic Quadrant for WAN Edge Infrastructure, 2019 which complements Aruba’s leadership in wired and wireless networking.

“Bringing together Silver Peak’s advanced SD-WAN solutions with Aruba’s industry leading networking portfolio provides an unprecedented opportunity to deliver a comprehensive business-driven solutions to our customers,” said David Hughes, founder and CEO, Silver Peak. “The Silver Peak and Aruba teams share a common vision and goal to provide simplicity, scalability, and application-awareness at the edge. With Aruba’s extensive go-to-market, we will further accelerate our ability to drive faster adoption of these transformational technologies. We are excited for the opportunities we will have as a combined team to accelerate innovation in this fast-growing segment of the networking market.”

Massive Growth in Connected Devices and Cloud Requirements Accelerating Demand for Complementary SD-WAN Solutions
As applications continue to move to the cloud, remote working and mobile employees are on the rise, and billions of IoT devices are added to the network, the SD-WAN market is experiencing significant growth. That is expected to continue, with 650 Group forecasting that the market for SD-WAN will grow from $2.3B in 2020 to $4.9B in 2024, a +20.5% CAGR.

Legacy WAN architectures are no longer viable and incur relatively high costs, compelling enterprises to invest in SD-WAN technology to ensure secure, scalable, and efficient connections from the edge of their network to a diverse mix of on-premises and cloud-based endpoints. The combination of Aruba’s all-in-one SD-Branch strategy and remote worker solutions with Silver Peak’s SD-WAN and WAN optimization offerings will allow HPE to better address a greater set of customer requirements and capitalize on this market opportunity.

Intelligent Edge Central to HPE’s Strategy
In 2018 HPE announced its strategic plan to invest $4 billion in intelligent edge over 4 years, and the company has been identifying opportunities to better help customers convert their data – from every edge to any cloud – into actionable insights that drive seamless interactions, while delivering simplified user and IT experiences. The recent impacts of the global pandemic have intensified customers’ requirements for powerful solutions at the edge that put a premium on security, connectivity, and performance. This investment is consistent with HPE’s core strategy focused on accelerating investments in areas of attractive, profitable growth including the intelligent edge.

Expands Aruba’s Addressable Market
The companies expect the combination to create opportunities for economic upside through enhanced growth and profitability by:
• Providing a value proposition to joint customers through integrated offerings that addresses a greater set of customer requirements
• Targeting an expanded TAM across SD-WAN and SD-Branch implementations
• Accelerating WAN transformations across HPE and Aruba’s broad global customer base

Transaction Details
HPE has entered into a definitive agreement to acquire Silver Peak for approximately $925 million in cash.

Bringing together Aruba and Silver Peak will result in an enhanced financial profile for HPE’s intelligent edge business. We expect the combination to drive revenue opportunities and to be accretive to intelligent edge segment revenue growth and gross margin.

HPE expects the transaction to be neutral to non-GAAP EPS in FY22.

The transaction is expected to close of HPE’s 4FQ20, subject to regulatory approvals and other customary closing conditions.