Juniper Buying WLAN Startup?

Juniper Networks Inc. (Nasdaq: JNPR) is in talks to buy an enterprise wireless LAN startup, with industry sources pointing to Meru Networks Inc. as the likeliest candidate.

A source in the enterprise wireless LAN industry tells Unstrung that Juniper plans to spend a maximum of $200 million on a wireless LAN company and has been in talks with both Meru and Colubris Networks Inc.

"Meru is in the lead," the person says.

Another industry source confirms that Juniper is currently talking to Meru. The source expects that the networking player would pay a maximum of $150 million but more likely closer to $100 million for the startup.

A WiFi controller company would give Juniper another major piece it needs to compete against Cisco Systems Inc. (Nasdaq: CSCO) and others in the enterprise networking market. Juniper recently ramped up its presence in the corporate wireless LAN niche with its buyout of popular security software firm Funk. (See Juniper Gets Funky.)

Juniper already has partnerships with both Colubris and Meru. Colubris supplies a WiFi public access product that links with Juniper's B-RAS DSL aggregator. Meru recently inked an enterprise WLAN deal with Juniper. (See Colubris Finds Juniper's Hotspot and Juniper & Meru Partner.)

Meru has been noticeably beefing up its security features of late. (See Meru Offers RF-Level Security.) This could be key for Juniper, which initially got into the enterprise space through its acquisition of security firm NetScreen.

But while either Colubris or Meru would provide Juniper with the controller and access point technology needed to compete, it is not clear how much either would provide in terms of a revenue stream from enterprise customers.

Meru wouldn't confirm or deny the acquisition talk. "Meru is very focused on extending its leadership position in wireless VOIP," says CEO Ihab Abu-Hakima in an email statement late on Friday evening. "The company enjoys a highly differentiated value proposition and continues to execute on its business plan to expand market share and its broad customer base. Meru has seen a great deal of interest from the investment community -- stay tuned."

Meru's last official funding round was in June 2005 when it pulled in $12 million. (See Meru Gets $12M Third Round.)

For its part, Colubris recently replaced its CEO and cut 10 percent of its staff in a bid to control costs as it once again pushes to make its mark in the enterprise market. (See Colubris Gets New CEO.)

Neither Colubris nor Juniper returned calls for comment about possible acquisition talks.

Some say that the announcement of an acquisition could come very soon, with one source telling Unstrung that it is already a "done deal."

— Dan Jones, Site Editor, Unstrung