May 20, 2002, 3:33 PM — Carrier network gear vendor Juniper Networks Inc. has agreed to acquire Unisphere Networks Inc., a network equipment division of Siemens AG, in a deal that also will give Juniper access to Siemens' worldwide sales channels, the companies announced Monday.
Juniper, in Sunnyvale, California, the biggest rival to giant Cisco Systems Inc. in the router business, will acquire Unisphere for US$375 million and 36.5 million shares, according to a statement from the companies. Based on Juniper's closing stock price of $9.85 on Friday, the deal will be worth about $740 million, the statement said. The acquisition is subject to regulatory approvals and is expected to close in the third calendar quarter of this year.
Unisphere, based in Westford, Massachusetts, makes routers, gateway devices, and other equipment and software for networks based on IP (Internet Protocol).
As part of the agreement, Munich-based Siemens will sell Juniper's routers and other carrier equipment through its sales and system integration operations around the world. Juniper's equipment will help Siemens create next-generation networks that can carry voice and video as well as data over IP networks, the company said.
At the close of the transaction, if it is approved, Siemens will own slightly less than 10 percent of Juniper, according to the statement.
The deal could bolster Juniper's offerings for the edge of service provider networks and give it a greater sales reach, while allowing Siemens to set up complete networks, said Kevin Mitchell, an analyst at Infonetics Research Inc., in Woburn, Massachusetts.
Juniper began as a maker of routers for the core of carrier networks but recently has expanded into equipment for the edge, including routers, CMTS (cable-modem termination systems) and mobile IP services.
"The edge has been a fairly hot market, and for Juniper that was a bright spot in 2001, but there was some question whether their edge routers are optimized to deal with edge routing needs," Mitchell said.
Unisphere's lineup would bring in features such as sophisticated service management software and MPLS VPN (Multiprotocol Label Switching virtual private network) initiation, he said.
Together, Juniper and Unisphere had 18 percent of the edge router market in the first quarter of 2002, second only to Cisco's 59 percent, Mitchell added.
Unisphere was formed in 1999 when Siemens combined three U.S. startups with one of its own divisions in a move to strengthen its portfolio for next-generation networks that carry a variety of kinds of services, including voice calls, over IP networks.
In afternoon trading on the Nasdaq, Juniper's stock (JNPR) was down 4.05 percent at $9.45.
