Activist investor Jana Partners says takes big stake in Juniper

Fri Jan 24, 2014 12:00am EST

Jan 24 (Reuters) - Jana Partners LLC has taken a large stake in Juniper Networks Inc, a move that comes at a time when the network gear maker is being urged by one of its prominent investors to increase shareholder returns.

Intensifying competition among U.S. telecom companies to expand their offerings has been a boon for network equipment makers such as Juniper, Riverbed Technology Inc and F5 Networks Inc, which has in turn caught the attention of activist investors.

Hedge fund Jana did not disclose the quantum of its investment in Juniper, but said it is now one of the largest shareholders in the company, according to a letter to investors that was seen by Reuters.

Jana estimates Juniper could potentially save $300 million by implementing certain business plans it suggested. It also wants the tech firm to start paying out dividends, a demand also echoed by peer Elliott Management Corp, which disclosed a 6.2 percent stake in Juniper.

Elliot, run by Paul Singer, had earlier urged Juniper to buy back shares, start paying a dividend and consider cutting costs.

Elliot said the "undervalued" stock could be worth $35-$40 if Juniper implemented its suggestions and focused on revamping its core business of making routers and switches for mobile carriers such as Verizon Communications Inc and AT&T Inc .

Jana said in the letter that it has been talking to Juniper management to explore ways to unlock "shareholder value" and has cited management compensation as an area of reform. The hedge fund also suggested addition of new directors to the company's board.

A Juniper spokeswoman told Reuters in an email that the board and management team have been comprehensively analyzing the company's priorities for some time and are finalizing the review "with a sense of urgency."

"We look forward to presenting the details of our integrated operating plan as we finalize them in the coming weeks. We intend to continue a constructive dialogue with our shareholders, as well as our customers, partners and employees," the spokeswoman said.

Last week, Riverbed Technology rejected Elliott Management's $3.08 billion bid, saying the offer did not reflect the company's success in turning around its business.

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