Hewlett Packard Enterprise Prices Public Offering of Mandatory Convertible Preferred Stock

HPE Announces Pricing of Mandatory Convertible Preferred Stock Offering

Hewlett Packard Enterprise (HPE), a leading global technology company, has revealed the pricing details of its public offering of mandatory convertible preferred stock. The company aims to raise approximately $1.35 billion through this offering, which is set to play a crucial role in financing its pending acquisition of Juniper Networks 1

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Offering Details and Terms

The offering consists of 27 million shares of 6.25% Series A Mandatory Convertible Preferred Stock, with a liquidation preference of $50 per share. HPE has granted the underwriters a 30-day option to purchase up to an additional 4.05 million shares, potentially increasing the total offering size 2

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Each share of the preferred stock is set to automatically convert into a variable number of shares of HPE's common stock on April 1, 2027, unless converted earlier. The conversion rate will be determined based on the average volume-weighted average price (VWAP) of HPE's common stock over a 20-day trading period ending on March 29, 2027 1

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Dividend and Conversion Details

The preferred stock will bear a dividend at an annual rate of 6.25% of the liquidation preference, payable quarterly in arrears. The conversion rates are structured as follows:

1. If the average VWAP is greater than $22.9885, the conversion rate will be 2.1750 shares of common stock per share of preferred stock.
2. If the average VWAP is between $19.1571 and $22.9885, the conversion rate will be between 2.1750 and 2.6100 shares of common stock.
3. If the average VWAP is less than or equal to $19.1571, the conversion rate will be 2.6100 shares of common stock 2

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Use of Proceeds and Strategic Implications

HPE intends to use the net proceeds from this offering, along with cash on hand and other debt financing, to fund the cash consideration for its pending acquisition of Juniper Networks. This move is part of HPE's broader strategy to enhance its networking capabilities and strengthen its position in the enterprise technology market 1

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Closing and Additional Information

The offering is expected to close on January 19, 2024, subject to customary closing conditions. J.P. Morgan, BofA Securities, and Morgan Stanley are acting as joint book-running managers for the offering. HPE has filed a registration statement, including a prospectus and a preliminary prospectus supplement, with the SEC for this offering 2

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This strategic financial move by HPE underscores the company's commitment to expanding its portfolio and capabilities through the acquisition of Juniper Networks, potentially reshaping the competitive landscape in the enterprise networking and technology sectors.