Juniper to acquire NetScreen for $3.63 bn

By SiliconIndia   |   Thursday, 19 February 2004, 08:00 Hrs
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NEW DELHI: Juniper Networks, Inc., co-founded by chief technology officer Pradeep Sindhu, has signed an agreement to acquire in a stock for stock deal NetScreen Technologies, Inc., which late year acquired Neoteris, a company co-founded by Indian American entrepreneurs and a developer of technology that provides secure access to corporate networks.

Based upon Juniper Networks' stock price of $29.47 on February 6, the deal initially was valued at about $4 billion, which was a premium of 56 per cent above NetScreen's pre-announcement price of $26.40. But Juniper shares fell 11 per cent on February 9 on the announcement, with some investors fretting that the price was too steep, making the deal worth $3.63 billion. NetScreen shares rose $9.54, or 36 per cent, to $35.94 Feb. 9.

"One of the concerns people had was on the valuation of the acquisition and how much the premium was versus the close Friday Aalok Shah, an analyst at Pacific Crest Securities, told Reuters. "I definitely think it's something that caught people off guard."

"The premium is on security," countered Chris Byrnes, vice president of security practices at the META Group. "Strategically they don't have much choice."

Juniper will pay 1.404 shares of its common stock for each outstanding NetScreen share. Juniper is the second-largest maker of routers that direct computer traffic across the Internet, while NetScreen makes security devices such as firewalls that keep networks secure. Both companies are based in Sunnyvale, Calif.

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