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Hewlett Packard in talks to acquire Aruba Networks

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February 26, 2015

HP says it's in talks to acquire Aruba Networks, a maker of wireless-network infrastructure used by hotels, universities and shopping malls.

The acquisition could be confirmed as soon as next week, said one person that knows, asking not to be identified discussing private information.

The deal hasn’t been completed yet and the talks could still fall through, however. This would be the largest acquisition in several years for HP, where CEO Meg Whitman has been focused on cutting costs and returning the business to growth.

HP planning to split itself in two later this year, with Whitman remaining in charge of the business focused on enterprise customers.

Hewlett-Packard is “now in a position where we can actually make acquisitions, which we couldn’t when we started,” Whitman said in an interview on Tuesday, after the company released its quarterly earnings.

Howard Clabo, a Hewlett-Packard spokesman, declined to comment, as did Pavel Radda, a spokesman for Aruba.

Aruba makes hardware and software used to build Wi-Fi networks for customers including China’s Dalian Wanda Group Co., which uses the technology in shopping malls.

Other customers include California State University at Los Angeles and the Edzan Hotels & Suites in Qatar.

The company’s annual sales are projected to grow to more than $1 billion by fiscal 2017, the average of eight analysts’ estimates compiled by Bloomberg, from $729 million in the year through July 2015.

HP’s entire networking group contributed about $562 million in sales for the company’s first quarter, down 11 percent from the year-earlier period.

The division has faced challenges in the United States due to several changes in the types of networking technology being acquired, and in China, due to management changes at its H3C networking division.

HP is in the process of selling its majority stake in H3C, people familiar with the situation have said yesterday.

But in the end, Aruba would be a small addition to HP’s overall business. The Palo Alto company reported sales for the first quarter of $26.8 billion.

Hewlett-Packard has a checkered past when it comes to acquisitions. In the ten years before Whitman took over, the company struck almost $66 billion of acquisitions, including the U.K.’s Autonomy Corp. fiasco for $10.3 billion in 2011.

Just one year after that deal closed, HP said it would write down about 85 percent of that acquisition cost after discovering several accounting improprieties that inflated Autonomy’s financial statements.

Source: Hewlett-Packard.

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