HPE's $14B Juniper acquisition wins federal court approval

A federal judge in San Jose approved the Justice Department's settlement clearing the way for Hewlett Packard Enterprise Co.'s $14 billion acquisition of Juniper Networks Inc., concluding that the antitrust settlement serves the public interest.

Thirteen states, including California, sought to block the merger, arguing that the Justice Department's settlement of its antitrust challenge resulted from improper lobbying.

U.S. District Judge P. Casey Pitts approved the settlement late Wednesday, requiring Hewlett Packard Enterprise to divest its Instant On business and the combined company to license Juniper software to independent competitors.

"While the states have performed an invaluable public service in bringing to light additional details about the machinations at the DOJ that led to the settlement, they have not shown that entry of the amended proposed final judgment would not be in the public interest," he wrote. U.S. v. Hewlett Packard Enterprise Co., 25-cv-00951 (N.D. Cal., filed Jan. 30, 2025).

Attorneys with Gibson, Dunn & Crutcher LLP, Freshfields US LLP and Wilkinson Stekloff LLP represented Hewlett Packard Enterprise. Los Angeles partner Samuel G. Liversidge led the Gibson Dunn team.

Colorado Attorney General Phil Weiser led the states' opposition. Justice Department attorney Henry C. Su defended the settlement.

The Trump administration sued to block Hewlett Packard Enterprise's acquisition of Juniper Networks shortly after the president took office. But in June, the DOJ dropped its antitrust challenge in exchange for the concessions.

The states sought to intervene minutes later, citing allegations by former Principal Deputy Attorney General Roger P. Alford, who said two Justice Department officials "perverted justice" to settle the case.

Pitts ruled in November that the states could intervene in the Tunney Act proceeding to oppose approval of the settlement.

In his ruling, the judge concluded that the companies' market shares, the divestiture agreement and the possibility that the Justice Department could "walk away" from its original lawsuit justified approving the settlement.

Pitts, an appointee of President Joe Biden, recounted the history of negotiations between the Justice Department and Hewlett Packard Enterprise and the involvement of several outside lobbyists, including Mike Davis, an outside adviser to President Donald Trump on judicial nominations.

Lawyers in the Trump administration's Antitrust Division, then under the leadership of Gail Slater, negotiated with Hewlett Packard Enterprise officials to try to resolve the antitrust suit and told the company the divestiture of Instant On was "inadequate."

But Hewlett Packard Enterprise's outlook changed June 25, when DOJ Chief of Staff Chad Mizelle informed company officials that Associate Attorney General Stanley E. Woodward Jr. would be taking over negotiations for the government.

Two days later, a settlement was filed, the judge wrote.

Alford and then-Deputy Attorney General William J. Rinner, who was head of merger enforcement in the Antitrust Division, were both fired in July. Slater resigned in February.

Pitts concluded that Hewlett Packard Enterprise failed to disclose, as required by the Tunney Act, that one of its lobbyists, William Schwartz, spoke with Woodward and Mizelle and met with CIA and Department of Defense officials.

But the judge wrote that the Tunney Act was unclear about what consequences should follow from these "procedural violations." Pitts concluded that the states' involvement had reduced any risk.

"Instead, the public now has a greater understanding of both who participated in discussions with the government regarding the lawsuit on HPE's behalf and the various potential remedies that the government considered during those discussions," he wrote.

"Because the parties' failure to comply perfectly with the Tunney Act's procedural requirements did not result in prejudice, those procedural defects do not on their own bar entry of the proposed final judgment," Pitts added.

Despite flaws the states identified in the Instant On divestiture, the judge concluded it "could nonetheless promote competition in the market to some extent."

"There is little doubt that permitting HPE's acquisition of Juniper to go forward may lessen competition within the U.S. enterprise-grade WLAN solutions market by eliminating one of the three primary competitors within that market," Pitts wrote.

"At the same time, however, the Court lacks the independent power to prevent that outcome, and the conditions imposed by the proposed final judgment may help ameliorate the impact of the acquisition to at least a limited extent," he added.

Pitts praised the states' involvement, saying that without them, the public would not have learned that Justice Department leadership overruled Antitrust Division staff.

"The states may still bring their own challenge to the merger," he wrote. "Even short of such an independent challenge, the states' efforts may help inform the political process and future engagement with the Executive Branch in matters relating to antitrust enforcement."

California Attorney General Rob Bonta said in a statement that he was disappointed with the decision.

"The court called U.S. DOJ's deal a 'limited' settlement approved under duress after the Trump Administration threatened to dismiss the lawsuit, leaving the public with no remedies at all -- Americans deserve better," he wrote.

Adam Bauer, a spokesperson for Hewlett Packard Enterprise, said the company is gratified by Pitts' approval.

"As the judge's opinion notes, any issues with respect to the disclosure process were procedural and non-prejudicial," Bauer wrote. "HPE acted in good faith to fulfill its obligations with respect to the Tunney Act, and the settlement has been approved as being in the public interest."