Juniper Networks, the networking equipment company, said on Thursday that it had reached an agreement with the hedge fund Elliott Management to nominate two new directors to its board and return more money to shareholders, avoiding a possible proxy fight with the hedge fund.
Elliott Management, which disclosed a 6.2 percent stake in Juniper and began pushing for change last month, has agreed to support the company’s director candidates and the other new initiatives, which include efforts to streamline its business portfolio and cut costs, Juniper said.
Juniper said it would nominate Gary Daichendt, a former Cisco executive, and Kevin DeNuccio, the former president and chief executive of Redback Networks, for election to its board. The company also said that Kevin Johnson, who retired as its chief executive last year, would step down from the board at the end of February.
The plan is quite similar to a proposal that Elliott put forward in January. The two director nominees were chosen by Elliott, according to a person briefed on the matter.
Juniper’s shares were up about 1.6 percent in trading after hours.
“Today’s announcement is an incredibly positive development for Juniper and its shareholders,†Jesse Cohn, a portfolio manager at Elliott Management, said in a statement. “Elliott is highly optimistic about the company’s future and looks forward to supporting Juniper in its continued focus on creating shareholder value.â€
Under the program announced on Thursday, Juniper plans to return at least $3 billion to shareholders over the next three years through share buybacks and dividends. That plan involves $2 billion in buybacks through the end of the first quarter of 2015 and a quarterly cash dividend of 10 cents a share beginning in the third quarter of 2014, all of which would be financed using cash on hand and newly issued debt.
Juniper also said it would seek to streamline its operations and portfolio and focus more on certain fast-growing markets. That will help it reduce costs and improve operating margins, the company said, adding that it had established a “cost control committee†led by Shaygan Kheradpir, the new chief executive.
“I joined this phenomenal company as an agent of change,†Mr. Kheradpir said in a statement. “The initiatives announced today are based on a comprehensive review of our business and customer needs, and we are confident that they will drive long-term, profitable growth by capturing greater share in the most meaningful market segments.â€
The announcement averts what could have been a proxy fight with Elliott Management. The hedge fund hinted that it had found a slate of director nominees that it was prepared to put forward.
Another hedge fund, Jana Partners, had also set its sights on Juniper, telling its investors last month that it took a large stake in the company.
