Hewlett Packard shares fall on $1.35 billion convertible stock offer to buy Juniper By Reuters

(Reuters) – Shares in Hewlett Packard Enterprise (NYSE: ) fell 6.4 percent in extended trading after the AI ​​server maker announced a mandatory $1.35 billion convertible preferred stock offering to- and finance the acquisition of Juniper Networks (NYSE: ).

Earlier this year, HPE said it would acquire the networking equipment maker for $14 billion in an all-cash deal in a bid to improve the company’s AI offerings.

HPE said the net proceeds from the offering will be used to cover fees and expenses related to the pending acquisition.

A convertible preferred stock offering allows investors to buy preferred stock, which often pays higher dividends than common stock. Investors also have the option to convert their preferred stock into common stock.

The preferred shares offered by HPE will automatically convert into a number of shares of common stock on or about September 1, 2027, unless previously redeemed or converted.

Investment banks Citigroup, JP Morgan and Mizuho will act as joint book-running managers for the offering, the company said.

Last week, HPE raised its annual profit estimate, citing increased demand for AI servers driven by higher enterprise spending on AI infrastructure.