The lawsuit said that the combination of businesses would eliminate competition, raise prices and reduce innovation. Photo courtesy of HPE

The Justice Department sued to block Hewlett Packard Enterprise's $14 billion acquisition of rival Juniper Networks on Thursday, the first attempt to stop a merger by a new Trump administration that is expected to take a softer approach to mergers.

The Justice complaint alleges that Hewlett Packer Enterprise, under increased competitive pressure from the fast-rising Juniper, was forced to discount products and services and invest more in its own innovation, eventually leading the company to simply buy its rival.

The lawsuit said that the combination of businesses would eliminate competition, raise prices and reduce innovation.

HPE and Juniper issued a joint statement Thursday, saying the companies strongly oppose the DOJ's decision.

“We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws and will demonstrate how this transaction will provide customers with greater innovation and choice, positively change the dynamics in the networking market,” the companies said.

The combined company would create more competition, not less, the companies said.

The Justice Department's intervention — the first of the new administration and just 10 days after Donald Trump's inauguration — comes as somewhat of a surprise. Most predicted a second Trump administration to ease up on antitrust enforcement and be more receptive to mergers and deal-making after years of hypervigilance under former President Joe Biden’s watch.

Hewlett Packard Enterprise announced one year ago that it was buying Juniper Networks for $40 a share in a deal expected to double HPE’s networking business.

In its complaint, the government painted a picture of Hewlett Packard Enterprise as a company desperate to keep up with a smaller rival that was taking its business.

HPE salespeople were concerned about the “Juniper threat,” the complaint said, also alleging that one former executive told his team that “there are no rules in a street fight,” encouraging them to “kill” Juniper when competing for sales opportunities.

The Justice Department said that Hewlett Packard Enterprise and Juniper are the U.S.'s second- and third-largest providers of wireless local area network (WLAN) products and services for businesses.

“The proposed transaction between HPE and Juniper, if allowed to proceed, would further consolidate an already highly concentrated market — and leave U.S. enterprises facing two companies commanding over 70% of the market,” the complaint said, adding that Cisco Systems was the industry leader.

Many businesses and investors accused Biden regulatory agencies of antitrust overreach and were looking forward to a friendlier Trump administration.

Under Biden, the Federal Trade Commission sued to block a $24.6 billion merger between Kroger and Albertsons that would have been the largest grocery store merger in U.S. history. Two judges agreed with the FTC’s case, blocking the proposed deal in December.

In 2023, the Department of Justice, through the courts, forced American and JetBlue airlines to abandon their partnership in the northeast U.S., saying it would reduce competition and eventually cost consumers hundreds of millions of dollars a year. That partnership had the blessing of the Trump administration when it took effect in early 2021.

U.S. regulators also proposed last year to break up Google for maintaining an “abusive monopoly” through its market-dominate search engine, Chrome. Court hearings on Google’s punishment are scheduled to begin in April, with the judge aiming to issue a final decision before Labor Day. It’s unclear where the Trump administration stands on the case.

One merger that both Trump and Biden agreed shouldn’t go through is Nippon Steel’s proposed acquisition of U.S. Steel. Biden blocked the nearly $15 billion acquisition just before his term ended. The companies challenged that decision in a federal lawsuit early this year.

Trump has consistently voiced opposition to the deal, questioning why U.S. Steel would sell itself to a foreign company given the regime of new tariffs he has vowed.

Elizabeth Gerbel, CEO and founder of Houston-based E.A.G. Services Inc., shares how to navigate M&A activity for both startups and large companies. Pexels

All is not lost in a merger or acquisition, says this Houston energy exec

Guest column

Nervous about an upcoming merger or acquisition? You're not alone. Last year, there were nearly 15,000 mergers and acquisitions in the U.S., according to the Institute for Mergers, Acquisitions and Alliances. These transactions, although executed with optimistic intentions, don't always work out. What is it that separates those that deliver from those whose results simply fall flat?

While you won the legal battle, the real culprit to a failed merger or acquisition transaction lies in post-deal activities such as integrating the divesting company's assets into the acquiring company's existing systems, processes, and organizational structure. If executed poorly, companies could face several hurdles, including:

  • Increased acquisition costs
  • Loss in previously efficient business processes
  • Reduced data quality in current and acquired assets
  • Extended TSA timeline

With the stakes being high, it is critical for each step of a merger or acquisition to be rock solid before moving on to the next stage. In fact, when executed successfully, an M&A transaction can significantly benefit both companies — from startups to well-established corporations.

A strategy for M&A data integration

In order to facilitate efficient and effective merger or acquisition, the critical success factors focus on these driving goals: Minimizing organizational disruption and Maximizing ROI. To achieve these goals, we execute three main stages for every merger and acquisition.

  1. Planning
  2. Analysis
  3. Execution

We start with thorough planning, think of planning as the foundation for a successful merger or acquisition. Without a good plan, the company will be vulnerable to all sorts of structural weaknesses. To prevent key elements from falling through the cracks, companies must define objectives and data requirements, maintain strong communications, and develop both short-term and long-term expectations.

The next step – analysis – since data is absolutely essential in mergers and acquisitions. There is a lot to watch out for: What's the best way to extract and convert the acquired data? Will IT or business support need to be permanently added? What system configuration changes are required? What are the impacts to current business processes and internal audit controls? Will additional training be required? The answers to these questions are highly individualized to each merger and acquisition, and they'll impact how seamless the transition will be. Many people gloss over this stage but then realize the criticality not only in the case of a merger or acquisition but also in the case of a future divestiture.

Finally, the last stage: Execution. This stage is one of the main reasons why some mergers and acquisitions may fall short of expectations. To avoid common issues stemming from poor execution – including disruption of previously effective business processes, impaired customer service, and increase in the cost of the merger or acquisition – we coordinate roles and responsibilities, ensuring that all key tasks are executed. From day one to full integration, we continually monitor to ensure the company is on track to meet its initially defined objectives.

The risks and benefits of a merger or acquisition

I'll be candid: Without a solid foundation through adequate preparation, a merger or acquisition is set up to fail. This risk can be higher for startups and small companies, which don't have the resource buffer that some larger firms can fall back on. Large companies may face a different risk, business processes and data may not be aligned with their current state. And yet, according to Economy Watch, an extensively strategized merger or acquisition transaction, beyond increasing the company's size, can yield significant benefits that include:

  • Improving its strategic position
  • Entering a new market
  • Developing new assets
  • Lowering operational costs
  • Expanding market influence

For smooth mergers and acquisitions, we recommend a multi-step process so that you can identify and reduce risks, condense your integration timeline, and quickly capture value. Because despite the challenges, not all is lost during a merger or acquisition – and there is much to be gained.

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Elizabeth Gerbel is the CEO and founder of Houston-based E.A.G. Services Inc.

International beauty giant Shiseido Company Ltd. has acquired Houston-founded Drunk Elephant. Photo via Business Wire

Houstonian's skincare line acquired for $845 million

A beautiful acquisition

A skincare line with ties to Houston is joining the ranks of other popular beauty brands this week. International beauty giant Shiseido Company Ltd. has announced that it is acquiring Drunk Elephant in a reported $845 million deal.

Houstonian Tiffany Masterson, chief creative officer, founded the company in Houston in 2012. The quality of products and playful branding attracted a broad range of demographics as the company experienced exponential growth.

"I started this business as an industry outsider, and from the beginning I did things a little differently," Masterson says in a news release. "To join with a powerhouse beauty company such as Shiseido that leads the industry in innovation and global excellence is a dream come true for me and for Drunk Elephant. We share similar values, most importantly an unwavering commitment to the consumer. I chose a partner who will let the brand continue to be itself, with the same formulations and the same team."

According to the release, the acquisition will allow Drunk Elephant's products to expand more throughout America, and enter new markets in Asian and Europe. The new subsidiary will also have support from Shiseido's Global Innovation Center and Digital Center of Excellence.

"This transaction is squarely aligned with Shiseido's VISION 2020 goal of accelerating growth and creating value through strategic partnerships," says Masahiko Uotani, president and CEO of Shiseido, in a news release. "I am very pleased to welcome Tiffany and the Drunk Elephant team to the Shiseido Family and together, pursue our long-term mission of 'Beauty innovations for a better world.'"

Masterson will maintain her role as chief creative officer and add the title of president for the company. She will report to Marc Rey, CEO of Shiseido Americas and chief growth officer of Shiseido.

"Drunk Elephant is built on a strong brand foundation and a unique philosophy that fits perfectly with Shiseido's values and skincare heritage," Rey says in the release. "Our innovative and people-first cultures are well aligned, and we share an unwavering commitment to our consumers. I also believe the brand will contribute to the business performance of Shiseido Americas."

The beauty industry is having a bit of a moment right now as consumers — who have shelves and shelves of products to choose from — are drawn to specific products.

"While reasons for acquisitions in the beauty space vary, we are seeing that some of the big players are seeking to balance their portfolios by creating products and services that consumers find relevant," says Laura Gurski, Accenture's global lead for consumer goods and services, in a statement.

"It is crucial that brands completely reinvent the beauty experience, making it much more than a transactional event," she continues. "This is what startups and disruptors do best. They create a collaboration with each consumer, allowing them to participate and experience products, services and brands in new ways."

According to Accenture Strategy's research on M&A in consumer goods, companies acquiring new capabilities represents 47 percent of activity and new technologies represents 35 percent of activity. These figures are on par with more traditional reasons for M&A, like new industries (43 percent) and new geographic markets (37 percent).

"For the first time, beauty companies have the opportunity to achieve real differentiation by taking their relationships with consumers to a completely new level," Gurski says.

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Houston VC funding surged in 2024, fueled by major Q4 activity

by the numbers

The venture capital haul for Houston-area startups jumped 23 percent from 2023 to 2024, according to the latest PitchBook-NVCA Venture Monitor.

The fundraising total for startups in the region climbed from $1.49 billion in 2023 to $1.83 billion in 2024, PitchBook-NVCA Venture Monitor data shows.

Roughly half of the 2024 sum, $914.3 million, came in the fourth quarter. By comparison, Houston-area startups collected $291.3 million in VC during the fourth quarter of 2023.

Among the Houston-area startups contributing to the impressive VC total in the fourth quarter of 2024 was geothermal energy startup Fervo Energy. PitchBook attributes $634 million in fourth-quarter VC to Fervo, with fulfillment services company Cart.com at $50 million, and chemical manufacturing platform Mstack and superconducting wire manufacturer MetOx International at $40 million each.

Across the country, VC deals total $209 billion in 2024, compared with $162.2 billion in 2023. Nearly half (46 percent) of all VC funding in North America last year went to AI startups, PitchBook says. PitchBook’s lead VC analyst for the U.S., Kyle Stanford, says that AI “continues to be the story of the market.”

PitchBook forecasts a “moderately positive” 2025 for venture capital in the U.S.

“That does not mean that challenges are gone. Flat and down rounds will likely continue at higher paces than the market is accustomed to. More companies will likely shut down or fall out of the venture funding cycle,” says PitchBook. “However, both of those expectations are holdovers from 2021.”

Houston space company lands latest NASA deal to advance lunar logistics

To The Moon

Houston-based space exploration, infrastructure, and services company Intuitive Machines has secured about $2.5 million from NASA to study challenges related to carrying cargo on the company’s lunar lander and hauling cargo on the moon. The lander will be used for NASA’s Artemis missions to the moon and eventually to Mars.

“Intuitive Machines has been methodically working on executing lunar delivery, data transmission, and infrastructure service missions, making us uniquely positioned to provide strategies and concepts that may shape lunar logistics and mobility solutions for the Artemis generation,” Intuitive Machines CEO Steve Altemus says in a news release.

“We look forward to bringing our proven expertise together to deliver innovative solutions that establish capabilities on the [moon] and place deeper exploration within reach.”

Intuitive Machines will soon launch its lunar lander on a SpaceX Falcon 9 rocket to deliver NASA technology and science projects, along with commercial payloads, to the moon’s Mons Mouton plateau. Lift-off will happen at NASA’s Kennedy Space Center in Florida within a launch window that starts in late February. It’ll be the lander’s second trip to the moon.

In September, Intuitive Machines landed a deal with NASA that could be worth more than $4.8 billion.

Under the contract, Intuitive Machines will supply communication and navigation services for missions in the “near space” region, which extends from the earth’s surface to beyond the moon.

The five-year deal includes an option to add five years to the contract. The initial round of NASA funding runs through September 2029.

Play it back: Houston home tech startup begins 2025 with fresh funding

HOUSTON INNOVATORS PODCAST EPISODE 272

One of the dozen or so Houston startups kicking of the new year with fresh funding is SmartAC.com, a company that's designed a platform that enables contractors in the HVAC and plumbing industries to monitor, manage, and optimize their maintenance memberships through advanced sensors, AI-driven diagnostics, and proactive alerts.

Last month, the SmartAC.com raised a follow-on round with support from local investor Mercury to continue growth and expansion of the product, which has evolved on many ways since the company launched in 2020, emerging from stealth with $10 million raised in a series A. In a May 2023 interview for the Houston Innovators Podcast, Founder and CEO Josh Teekell explained how he embraced the power of a pivot.

The company's sensors can monitor all aspects of air conditioning units and report back any issues, meaning homeowners have quicker and less costly repairs. While SmartAC.com started with providing the service and tech to homeowners directly, Teekell says he's had a greater interest in working with plumbers and HVAC companies who then deploy the technology to their customers.

"It became quite evident that homeowners don't care about air conditioning really at all until their system breaks," Teekell says on the show. "The technology is really built around giving those contractors as another way to gain a customer relationship and keep it."

Revisit the podcast episode below where Teekell talks about SmartAC.com's last raise.

SmartAC.com's previous round in 2023 — a $22 million series B — was used grow its team that goes out to deploy the technology and train the contractors on the platform.

"We've been very fortunate to get some of the biggest names in Houston on our cap table," Teekell says in the May 2023 conversation. "Since we're raising a bunch of money locally, everyone understands what a pain air conditioning can be."