CNBC on Wednesday reported, citing sources, that Nokia was in talks to buy Juniper at an offer that would value the company at around $16 billion, higher than Juniper’s $11.26 billion market capitalization as of Wednesday’s close.
That valuation would imply a price of about $42 per share, a level last seen by Juniper shareholders six years ago, Morningstar analyst Ilya Kundozerov wrote in a client note.
Within hours of the CNBC report, however, Nokia, which does not typically comment on market rumors, said it was not preparing an offer for Juniper. nokia.ly/2j3cwiI
Bernstein analyst Pierre Ferragu said Nokia acquiring Juniper seemed a stretch citing an operational alliance limited to $300 million to $400 million in costs, near impossible product integration in routing and a risk of negative revenue combination.
Nokia also competes with Cisco's partner Ericsson ERICb.ST in Europe.
Bernstein’s Ferragu thinks Ericsson, not Nokia, is a better fit for Juniper.
“The natural buyer for Juniper remains Ericsson and for now, Ericsson is not in a position to consider the opportunity,” he said.
The telecom network equipment industry is going through the toughest part of a decade-long cycle, as demand for faster 4G mobile broadband equipment has peaked, while demand for next-generation 5G networks remains a few years away.
In the latest third quarter, Juniper reported a 2 percent decline in third-quarter revenue and Nokia’s network sales fell 9 percent to 4.8 billion euros ($5.7 billion).
Nokia had estimated the global market to fall 4-5 percent this year, compared with a previous forecast for a 3-5 percent drop, followed by a 2-5 percent fall in 2018.
The Finnish company is still digesting the acquisition of French rival Alcatel-Lucent for which it spent about $17 billion last year.
Nokia shares were down 0.4 percent, while Ericsson’s shares were up 0.4 percent.
Reporting by Supantha Mukherjee in Bengaluru; Editing by Bernard Orr
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