Hewlett Packard Enterprise Buying Networking Firm Silver Peak For $925M

Hewlett Packard Enterprise Inc HPE announced Monday it's buying Silver Peak, an SD-WAN (Software-Defined Wide Area Networking) company, for $925 million. 

What To Know: Silver Peak will be merged with HPE’s Aruba unit, which manufactures Wi-Fi networking equipment, Reuters reported.

The deal will strengthen HPE in the SD-WAN segment and comes at a time when the demand for such services is rising, triggered by employees working on jobs remotely due to the COVID-19 pandemic.

“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," Keerti Melkote, president of Intelligent Edge for HPE, said in a statement.

Silver Peak has a revenue of $100 million and has raised $210 million in funding so far. The company was valued at $465 million in June 2018, Reuters reported citing Pitchbook data.

Why It Matters: The two companies had begun exploring a deal last year, Melkote told Reuters.

HPE will offer Silver Peak’s SD-WAN services to its customer base and expects the market to grow to $5 billion from the current $2 billion in the coming years.

Silver Peak says it's a leader in the SD-WAN market with more than 1,500 production SD-WAN customers globally.

Wells Fargo analyst Aaron Rakers said, while noting the existing synergies between the two companies, termed the acquisition “net neutral” with “a net-neutral non GAAP EPS expectation through [FY] 2022.”