Deutsche Bank's Key Takeaways Of The Hewlett-Packard/Aruba Networks Deal

Hewlett-Packard Company HPQ announced on Monday that it will acquire network access solutions provider Aruba Networks, Inc. ARUN for $24.67 per share, or a total of approximately $3 billion (1.7 billion pounds) in cash.

Shares of Aruba recently traded at $24.42, down 1.55 percent.

The purchase, which was speculatively reported by Reuters and Bloomberg last week, is expected to close in the second half of Hewlett-Packard's fiscal 2015, and is anticipated to be accretive to earnings in the first full year following the close. Aruba will still be led by CEO Dominic Orr and co-founder Keerti Melkote, who will report to Hewlett-Packard's Enterprise Group leader Antonio Neri.

In a report rolled out during the morning hours, Deutsche Bank commented on the deal, which allows Hewlett-Packard to expand its networking segment revenue "by roughly one-third in a high-growth segment," improving its profitability mix, aided by Aruba's high margins.

"The deal also positions HPQ well to compete in the 802.11ac Wi-Fi segment and to address the continued growth in cloud and mobility."

The firm expects "the hardware market to continue to consolidate with a smaller number of suppliers controlling more of the total infrastructure spend. In addition, hardware is gradually moving to converged solutions, with only a handful of companies able to offer a full converged solution, including Cisco, Dell and HP."

In this context, the analysts see the acquisition of Aruba as a positive for Hewlett-Packard, which is "well positioned for the changes in the IT landscape," but still undervalued.