Hewlett Packard Enterprise Co. today confirmed reports that it’s intending to acquire Juniper Networks Inc. in an all-cash deal valued at around $40 per share, or roughly $14 billion.

The confirmation came after reports of an acquisition emerged around 24 hours earlier, and it turns out HPE is paying quite a premium for the company. Juniper’s stock had been lying flat over the previous couple of weeks at around $30 per share, before shooting up to $36 per share when the Wall Street Journal first reported on the talks.

HPE said the acquisition will have the effect of doubling the size of its existing networking business. If the deal is completed, either late this year or early next, HPE’s networking segment will be expected to contribute more than half of its annual operating income. It would also be HPE’s largest acquisition since the 2011 purchase of Autonomy Ltd., which occurred prior to the split between HPE and HP Inc.

The Next Platform notes in its analysis that HPE is no stranger to the world of networking, as the company sells some of its own application-specific integrated circuits and also owns Aruba Networks, which was acquired for $3 billion back in 2015.

One of the reported reasons for the deal is that HPE will be able to capitalize on the growing market for artificial intelligence. Juniper offers an AI service known as Mist AI, which is said to use machine learning algorithms to optimize customer’s experiences around wireless access. It also uses AI to enhance the capabilities of its network security software.

“This transaction will strengthen HPE’s position at the nexus of accelerating macro-AI trends, expand our total addressable market, and drive further innovation for customers as we help bridge the AI-native and cloud-native worlds, while also generating significant value for shareholders,” stated HPE Chief Executive Antonio Neri (pictured).

In an analysis of the news, Zeus Kerravala, principal analyst at ZK Research, said it could be argued that the acquisition makes sense because HPE’s and Juniper’s strengths lie in different areas, though Kerravala concluded that it wasn’t the best use of the considerable debt HPE will need to fund the acquisition. Juniper is best known for its innovation and technology, with Mist AI becoming the cornerstone of its business and helping it to carve out a significant share of the enterprise networking market. Indeed, enterprise accounted for 38% of Juniper’s total revenue in its most recent quarterly financial report, and has said it expects to double its sales in that segment within the next three years.

As for HPE, its main strength is channel and go-to-market, Kerravala said. “This isn’t to say the networking portfolio isn’t strong, as it’s currently the most innovative part of HPE, but it has a massive channel and an enormous services business,” he wrote. “In theory, combining the two has some strong synergies, bringing the best of both into one company.”

Enterprise Strategy Group analyst Bob Laliberte weighed in too, saying that HPE has realized AI capabilities are a key differentiator for networking providers. “Juniper has made all the right moves with Mist,” he pointed out. “The fact that HPE is willing to pay that kind of premium to acquire it is a validation of the work Juniper has put into it over the past four years.”

Although Juniper will undoubtedly increase HPE’s influence in the networking business, there is some overlap between the companies, with Aruba and Juniper selling many similar products that compete with Cisco Systems Inc. and others.

In some ways, the deal represents a consolidation of the networking industry, and HPE may have some issues with regulators, who have been quite vigilant in recent years. But should the merger proceed as planned, Juniper CEO Rami Rahim is expected to lead the company’s combined networking business.

“It looks like HPE intends to double down on networking in order to increase its total addressable market in the on-premises segment,” said Holger Mueller of Constellation Research Inc. “Juniper comes with a growing cloud business and a substantial wide-area network business too, as well as its AI offerings. This is a good move for HPE and its investors, but it remains to be seen how the deal will stand up to regulatory scrutiny.”

HPE said it plans to discuss the implications of the deal during an investor call scheduled for 8:30 a.m. EDT Wednesday.

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