Hewlett-Packard said it would buy wi-fi network gear maker Aruba Networks for about US$2.7 billion, the biggest deal for the world's No. 2 PC maker since its botched acquisition of Britain's Autonomy in 2011.
HP has had a dismal record for big acquisitions, having written off multibillion-dollar acquisitions of Autonomy and technology outsourcing provider EDS, which it bought in 2008.
The purchase of Aruba would help HP boost its share in the wireless local area network (WLAN) market as more companies allow employees to access work systems through their wireless devices.
"I think it will add a layer of high-growth revenue to the mix in a way it helps HP reach its goal of growing faster," Atlantic Equities analyst Josep Bori told Reuters.
HP is way behind market leader Cisco Systems in the networking business, and the Aruba acquisition would help it to gain a little more market share, he said.
HP has a 4-5 percent share of the enterprise WLAN market, compared with Aruba's 10-13 percent, FBN Capital Markets analyst Shebly Seyrafi estimated in a note dated 27 February.
The WLAN market is estimated to grow 40 percent to about US$13 billion in 2019, according to market research firm Dell'Oro Group.
HP, which has struggled to adapt to mobile and online computing, plans to separate its computer and printer businesses from its corporate hardware and services operations this year.
The all-cash offer of US$24.67 per share is a premium of 34.4 percent to Aruba's close on 24 February, the day before Bloomberg reported about a possible deal.
Aruba shares fell 1.6 percent to US$24.41 in afternoon trading on Monday US time. The stock had risen about 40 percent since the Bloomberg report. HP shares were down marginally at US$34.76.
HP's cash pile stood at US$12.9 billion at the end of January.
Evercore Partners and Catalyst Partners served as financial advisers to Aruba.
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