Hewlett Packard Enterprise is in talks to buy Juniper Networks in a deal valuing the network gear maker at about $13 billion, a person familiar with the matter told Reuters on Monday.

A deal between the two companies could be announced as early as this week, the source said.

Shares of Hewlett Packard fell 7.7 per cent, while Juniper jumped 21 per cent in extended trading.

The deal would help bolster the nearly 100-year-old technology company’s artificial intelligence (AI) offerings, according to a WSJ report.

Hewlett Packard declined to comment on the WSJ report, while Juniper Networks did not immediately respond to a Reuters request for comment.

Last year, server maker HPE said it was rolling out a cloud computing service designed to power AI systems similar to ChatGPT.

Juniper’s high-performance network and service offerings include routing, switching, Wireless Fidelity (Wi-Fi), network security, AI-enabled enterprise networking operations (AIOps), and software-defined networking (SDN) technologies.

HPE, grappling with sluggish demand in its traditional server business, is looking to tap into Juniper’s offerings such as network security and AI-enabled enterprise networking operations (AIOps).

Revenue from Mist AI, Juniper’s cloud-based AI platform that helps enterprises streamline operations across wireless and wired networks, has nearly doubled over the “last couple of quarters”, CEO Rami Rahim said in December.

“Taking that Mist secret sauce and expanding it across more and more layers of network is definitely part of the strategy,” he had then said.

The companies have both struggled after the pandemic-induced demand surge ebbed but HPE, with its broader portfolio of products, has been able to navigate the slowdown better than Juniper.

Weak demand from inflation-hit wireless carriers and cable operators as well as stiff competition from Cisco has been a drag on Juniper.

Reuters