In another sign that the security market—and technology sector in general—is on the rebound, Juniper Networks Inc. on Monday agreed to acquire security appliance maker NetScreen Technologies Inc. for $4 billion in stock.
The purchase price is a premium of more than 50 percent for NetScreen’s shareholders. The company’s stock was trading at $26.40 at the end of trading Friday and had a market capitalization of $3.25 billion. Each NetScreen shareholder will receive 1.4 shares of Juniper stock.
NetScreen is one of the growing number of security appliance makers, and its acquisition by Juniper positions the combined company quite well to compete with larger security and networking players, analysts said.
“Juniper feels like they need a strong security play to compete with Cisco [Systems Inc.], and NetScreen is the obvious choice because their stuff is more network-friendly,” said analyst Pete Lindstrom, research director at Spire Security LLC in Malvern Pa. “It makes a lot of sense. NetScreen is an up-and-comer, and this gives them the ability to go toe-to-toe with Cisco.”
Juniper officials cited the two companies’ shared focus on moving and inspecting packets in the interior of networks as the key driver behind the acquisition.
NetScreen, also of Sunnyvale, will bring 900 employees to Juniper. Kriens added that Juniper may see some cost savings because of the acquisition, but said that wasn’t a major factor in the decision to buy NetScreen.
Juniper’s acquisition of NetScreen marks its biggest foray yet into the enterprise network, believes Frank Dzubeck, president of Communication Network Architects, a Washington-based consulting firm.