Juniper Networks shares surged over 20% in after-hours trading on Monday following reports from the Wall Street Journal indicating that Hewlett Packard Enterprise (HPE) is in advanced discussions to acquire the company for approximately $13 billion. The potential deal, as per sources familiar with the matter, could be announced within the week.

Juniper, a key competitor to Cisco in the networking equipment market, experienced a decline in stock performance last year, with its shares dropping approximately 8% in 2023, contrasting with the Nasdaq Composite’s 43% gain. In the third quarter, Juniper’s revenue contracted by 1% year-over-year, amounting to $1.4 billion.

The potential acquisition aligns with HPE’s strategic efforts to challenge Cisco, the dominant player in networking switches. In the latest quarter, HPE reported a 2% revenue increase from the previous year, with its fastest-growing segment being Intelligent Edge, encompassing data center switching. HPE held $4 billion in cash and equivalents at the end of October.

HPE, established in 2015 following the split of Hewlett-Packard, has notably refrained from significant acquisitions since its inception, with the exception of the $1.5 billion acquisition of supercomputer manufacturer Cray in 2019. In May, HPE agreed to divest its stake in the Chinese joint venture H3C for $3.5 billion. An executive from the company indicated during the October analyst meeting that HPE does not intend to maintain excess cash in the long term.

For more details, refer to the complete Wall Street Journal report here.

With the potential acquisition of Juniper Networks, HPE aims to strengthen its competitive position in the networking equipment market and expand its revenue streams. The outcome of these advanced discussions could significantly impact the landscape of the tech industry, particularly in the domain of data center networking.