In conventional or online stock trading, one of the aspects you need to keep your eyes open for is mergers and acquisitions.
Mergers and acquisitions are often the norm in the tech sector. Bigger firms look to acquire smaller companies that have specialized skills in a particular field which could give the parent company an edge in the competitive market. This could reflect on the acquiring company's stock value. It's a better solution than for the acquiring company to develop the technology in the field it doesn't have enough expertise in.
Hewlett Packard Enterprise Co. ($HPE) (not the PC and laptop arm HP Inc. ($HPQ)), has announced its agreement for acquiring IT infrastructure company SimpliVity. $HPE plans to strengthen its leadership in the hybrid IT solutions industry. It believes this acquisition will aid its strategy to get hold of the high-margin and fast-growing hyperconverged market by enabling it to offer the most comprehensive, hyperconverged infrastructure that will be built-for-enterprise.
The deal is worth $650 million in cash. $HPE has gone through a significant restructuring all through 2016 following its split from HP Inc. in November 2015. Its business has been stripped down to concentrate on core operations while also investing in businesses that are emerging. This acquisition is expected to provide $HPE with a major share of an industry that it says was worth around $2.4 billion in 2016, the hyperconverged market. The market is further expected to grow at a 25% compound annual growth rate and be worth around $6 billion by 2020.
Technological Advantages of the Deal for HPE
The new hyperconverged offering by HPE is enterprise-focused with advanced automation and best-in-class infrastructure features along with cloud management software. These features come with an advanced software-defined, data management platform by SimpliVity.
HPE believes that this acquisition expands its software-defined capability and matches its strategy for simplifying hybrid IT for customers. That's exactly what the hybrid IT user base is looking for – simple but advanced, resilient and secure on-premises infrastructure available at cloud economies. This acquisition takes $HPE right towards that goal and can make it a great market force.
It's worth watching how the acquisition shapes up in the hybrid IT solutions and hyperconverged market.
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