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Nutanix drops 10% after report HPE interest in acquisition wanes, talks end (update)

Dec. 23, 2022 9:40 AM ETNutanix, Inc. (NTNX) Stock, HPE StockCSCOBy: Joshua Fineman, SA News Editor11 Comments

Nutanix headquarters in Silicon Valley

Sundry Photography/iStock Editorial via Getty Images

Update 9:40am: Updates shares.

  • Nutanix (NASDAQ:NTNX) fell 10% after a report that Hewlett Packard Enterprise's (NYSE:HPE) interest in a potential acquisition of Nutanix (NTNX) is said to have cooled.
  • HPE is no longer in talks with

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Comments (11)

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As a nutanix customer thank feck for that!
Let's give credit where credit is due. The original executive team put the "hype" in "hyperconverged" and laughed all the way to the bank and back. Although they're long gone, no doubt they're still laughing 24X7. Impressive!!
Right hpe talks. They wanted to sell them a couple desktops is all. There's always a grain of Truth in these lies.
@Jon Brien hpe doesn't sell PCs. That's a different company.
I feel like this happens at least once a year with Nutanix. Stock pumps on B/O rumor, no B/O announced, stock treads water for a couple quarters, crushes at least one earnings report and pump begins again.
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For a fundamental view on why this loss-making stock is worth less than $15, see my blog post: seekingalpha.com/...
@Ranjit Thomas, CFA why on this news, the stock is only down 6%? I thought it should go down like 30%
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@G_X_C Hope runs eternal...
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Well, it was down 8 pct at close, but this is a good question. I wondered the same thing. It certainly hasn’t given up all of its takeover premium.

I haven’t followed it that closely for the last month. Fortunately, I sold out when it got over 30, because it just looked too expensive for there to be any more upside if HPE was the actual buyer. HPE simply can’t afford to pay that big a multiple and not destroy it’s own market cap. HPE might have gotten some multiple expansion if it bought NTNX, but not enough to offset the dilution and sustain its stock price.

I suspect the reason that NTNX has held up is that the market never thought that HPE was the best buyer, or the only interested buyer. I suspect that investors still place some probability on Cisco? I think it is known that Cisco attempted to buy NTNX before NTNX went public, but simply wouldn’t pay the $10 billion demanded, or whatever it was. So maybe investors think Cisco will finally do a deal now? But I have no idea if so many years later Cisco still wants this.

Beyond Cisco, maybe ORCL might be interested? Would Dell do something aggressive like this? Certainly it would be very dilutive, but maybe they think it would bring them into a more strategic sale, and might help with cloud penetration and positioning. But the cost of debt capital is so high right now.

Is there a crazy PE buyer? Thoma Bravo has continued to pay up for quality assets like Coupa. Is it possible that one of the other big PE funds could do something like that with NTNX? Would a PE fund that has a sizeable asset in their portfolio buy this to rescue that asset? Vista? SLP? I would say that’s unlikely But maybe there is some speculation about that.

Has NTNX maybe leaked out that they are going to have a good quarter? I have no idea, but that often happens when M and A discussion end.

These are all just questions. For me, I don’t see a reason to jump back in at mid 20s. At high teens or low 20s, I would probably do do it.

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