Shares of networking company Aruba are going crazy after a report that HP plans to buy it

Investors are snatching up shares of Aruba Networks thanks to a report that it’s in the final lap of negotiations to be acquired by HP.

Aruba is up about 20% Wednesday afternoon.

Prior to the gold rush for the stock, Aruba had a market cap of about $US2 billion, and now it’s about $US2.5 billion.

Aruba makes equipment for enterprise WiFi networks. Its annual sales are projected to grow to more than $US1 billion by fiscal 2017, according to analysts estimates compiled by Bloomberg, from $US729 million in the year through July.

It’s not clear what kind of multiple HP would be offering for Aruba, but sources told Bloomberg’s Alex Sherman and Ed Hammond, who broke the story, that this would be the largest acquisition deal in several years for HP.

The deal could be announced as soon as next week, if the talks don’t fall through.

HP just reported earnings on Tuesday, with disappointing revenue. Its networking group particularly struggled last quarter, with revenues down 11%.

Meanwhile, HP’s biggest competitor in the area, Cisco, is killing it in wireless. In its last quarter, reported earlier this month, wireless was up 18% year over year. Cisco execs credited Meraki for much of that. Cisco bought Meraki, Aruba’s main competitor, for $US1.2 billion in 2012.

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