* Juniper to return $3 bln to shareholders in 3 years
* To start quarterly dividend of $0.10 from 3rd quarter
FRANKFURT/HELSINKI Feb 20 Finland's Nokia
is considering buying U.S.-based Juniper Networks
to merge into its telecommunications network gear
business, German's Manager Magazin Online reported, citing
Nokia Solutions and Networks (NSN) Chief Executive Rajeev
Suri travelled to the United States late last year to discuss
with Juniper's management closer cooperation and a possible
merger that would strengthen NSN's weak U.S. business, the
online magazine said on Thursday.
Juniper has a stock market value of $13.7 billion, making it
a major takeover target for Nokia, but Manager Magazin said
Nokia could use Juniper's $3.1 billion cash to help finance the
NSN will be Nokia's primary operation after the sale of its
devices and services business to Microsoft in a 5.4
billion euro ($7.4 billion) deal, which is expected to close by
the end of next month.
Nokia had indicated it is looking at a number of options as
part of its strategic review to be completed in March.
A source familiar with NSN's strategy said no such deal was
imminent. Analysts have said, however, that NSN and other
smaller network equipment players are likely to pursue M&A
because high costs of developing better mobile broadband
infrastructure puts players with bigger research and development
budgets at an advantage.
NSN and Juniper are already in a partnership to develop and
sell network equipment to carriers.
Nokia's former Chief Executive Stephen Elop, who will return
to Microsoft after the deal closes, was COO of Juniper for about
a year from early 2007.
Raymond James analyst Simon Leopold said a deal with Juniper
was unlikely, with a failed joint venture focused on enterprise
switching and present partnerships having "not amounted to
Nokia would have to offer "at least" 10-20 percent premium
to where Juniper's stock is trading now, Needham & Co analyst
Alex Henderson said. He added that a deal was unlikely as Nokia
lacked the wherewithal and synergies.
Representatives of Nokia, NSN and Juniper declined to
comment on the latest report.
Juniper said later in the day it would return a minimum of
$3 billion to shareholders over the next three years through a
combination of share repurchases and dividends.
The network equipment maker said it would start a quarterly
cash dividend of 10 cents per share from the third quarter.
Paul Singer's Elliott Management Corp, which owns a 6.2
percent stake in Juniper, has urged the company to buy back
shares, start paying a dividend and consider slimming down.
The hedge fund 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
Last week, hedge fund Jana Partners disclosed a 2.65 percent
stake in Juniper to push the company to cut costs.
"We suspect a merger with Nokia would satisfy the activists
if Nokia paid a material premium to Juniper's current $27.20 per
share, perhaps valuing Juniper over $35 per share, or a market
cap above $17.5 billion," Raymond James' Leopold said.
After years of concentrating on cutting costs, NSN has said
it is now focussing on expanding the business and competing more
aggressively against industry leader Ericsson and
Other sources have said Nokia has considered a tie-up
between NSN and French rival Alcatel-Lucent.
Suri has not ruled out acquisitions but has also
said the company could grow on its own.
Juniper's shares closed marginally up at $27.41 on the New
York Stock Exchange. They rose to a high of $28.38 earlier in