Sunnyvale, Calif.-based router maker Juniper Networks announced today it's buying network security company NetScreen Technologies, also based in Sunnyvale, in a stock-for-stock transaction that puts the acquisition value at approximately $4 billion. For each outstanding share of NetScreen Technologies common stock, Juniper Networks' common stock will be exchanged in a fixed ratio of 1.404 when the acquisition is final sometime next quarter.
The acquisition positions Juniper as being able to go head to head with Cisco," said Pete Lindstrom, research director of Malvern, Pa.-based Spire Security.
This combined company will enable Juniper Networks, the No. 2 network equipment maker, to expand its traditional IP router offerings and services to now include more enterprise security, including firewalls, intrusion detection and virtual private networks for their networks.
"This is a combination of two strong companies. Both Juniper and NetScreen have proven their ability to execute separately, and together we will accelerate our ability to serve an expanded market with complementary best in class solutions," said Scott Kriens, chairman and CEO of Juniper Networks, in a prepared statement. "Our collective customers have told us security, reliability and performance are mission critical to their network users, and together we will deliver a compelling response to their needs."
Already, industry experts are responding to this surprise move by Juniper Networks. "It's more about market reach and less about integrating Netscreen technology into another product line," said Dennis Szerszen, a principal at analyst firm Hurwitz Associates. "I think over the next two or three years we're going to see a great deal of similar consolidations."
Netscreen made headlines two years ago when it launched a highly successful initial public offering, which some market experts took as a sign the tech market was rebounding.