Combination to yield more powerful Performance Management
Solutions and immediate return on current investments for both
customers and shareholders
WESTFORD, Mass.--(BUSINESS WIRE)--Sept. 20, 2007--NetScout
Systems, Inc. (NASDAQ: NTCT), an industry pacesetter for advanced
network and service assurance solutions, today announced that it has
entered into a definitive agreement to acquire Network General
Corporation, in a combined cash, stock, and debt transaction currently
valued at approximately $205 million. The acquisition, subject to
customary closing conditions and regulatory approvals, is expected to
be completed by early November. Network General employees will become
NetScout employees, and the newly combined entity will be
headquartered in Westford, Massachusetts.
NetScout believes that for the full year of fiscal 2009 the
combined company will approximately double NetScout's current revenue
rate, and that the transaction will be accretive for fiscal year 2009
on a non-GAAP basis and accretive on a GAAP basis by the end of fiscal
2009. The combined company will have a larger and more diversified
customer base supported by a larger sales force and a planned doubling
of R&D spending. Faster revenue growth is expected to be achieved
through a broader, integrated product portfolio which will provide
customers greater efficiency and value. It is anticipated that there
will be significant cost savings realized across the combined company,
improving operating margins and earnings per share.
The acquisition furthers NetScout's vision of providing superior
network-based performance management based on a KPI (key performance
indicator)/Flow/Packet paradigm. The new, extended portfolio will
directly benefit both customer sets by increasing the value of the
NetScout solutions available to them while protecting their existing
investments. NetScout customers will benefit from the addition of
best-of-breed expert packet analysis and data mining, and Network
General customers will benefit from best-of-breed real-time monitoring
and rapid top-down troubleshooting. For all customers, this will
translate into meaningful reductions in their MTTR (mean time to
restore) metrics, while reducing the training and skills required to
manage complex network-based operations.
"Today, we are bringing together two established companies with
complementary technologies to form a new stronger organization that
will have the scale, technology, and mindshare to meet some of the
greatest challenges associated with virtualization, convergence, SOA
and highly distributed network-centric operations," said Anil Singhal,
President and CEO of NetScout Systems. "We are thrilled by the
opportunity now before us to elevate and advance the state of the art
in packet-flow performance management solutions. This combination
positions us to substantially expand our ability to help the largest
organizations worldwide to assure that network-enabled applications
and services can reliably be delivered to diverse and geographically
extensive operations," continued Mr. Singhal.
The acquisition will accelerate NetScout's recently announced
entry into the Wireless Service Provider segment. This segment is
currently dominated by several large competitors, whose solutions have
relied on deep packet analysis versus NetScout's superior real time
monitoring and reporting. With the addition of Network General's
leading technology, NetScout will be able to offer the best solution
across a broad spectrum of performance monitoring and troubleshooting
requirements.
"There has been a great degree of common vision between the two
companies which will promote accelerated product integration and
continuation of our focus on technology leadership and support for our
customers," said Bill Gibson, CEO of Network General "We believe that
the combination of our two talented employee teams has tremendous
potential to shape the future of the IT and service provider markets."
"We have long believed in the potential of packet-flow technology.
This combination will accelerate our ambition to propel these
solutions into their destined role as critical components of
tomorrow's service-centric operating environments," said Ken Hao, on
behalf of Silver Lake and TPG. "The resulting organization will be an
agile and dynamic technology leader, in which we are thrilled to
become stakeholders."
"This combination should prove to be very good news for
organizations that are struggling to assure IT services in the face of
the constant onslaught of new applications and technologies," said
Dennis Drogseth, Vice President, Enterprise Management Associates.
"Most recent consolidations in the network management sector and the
strategies employed by the major networking and software technology
providers have largely been designed to broaden product portfolios and
span a wider range of customer needs. This trend highlights the
importance of network management and sets the stage for the next step:
combining the resources and market access of the best of breed
solutions in the packet/flow segment to deliver compelling solutions
to the set of operational challenges that have thus far eluded the big
five. NetScout's acquisition of Network General lays a powerful and
cohesive foundation for assuring application service reliability
across the distributed network environment - a complex and
multi-domain requirement that EMA believes will demand accelerated
attention as application designs become more modular and more
network-dependent."
Transaction details:
NetScout is making the acquisition, valued at approximately $205
million (based on the closing price of NetScout common stock on
September 19, 2007), with a combination of six million shares of
NetScout stock, $50 million of cash and $100 million of debt
financing. NetScout anticipates obtaining the debt financing either
from affiliates of Silver Lake and TPG or from third party financing
sources. After completion of the acquisition, Silver Lake and TPG will
become NetScout shareholders and representatives of Silver Lake and
TPG are expected to join the NetScout Board. The transaction is slated
to close in early November subject to customary closing conditions and
regulatory approvals.
Conference Call and Webcast: NetScout Systems will host a
conference call today at 9:00 a.m. ET, which will be webcast live
through the Company's website at http://www.netscout.com/investors.
Alternatively, people can listen to the call by dialing 866-701-8242
for U.S./Canada and 706-634-5113 for international callers and using
conference ID: 17348240. A replay of the call will be available after
11:00 a.m. ET on Sept. 20 for two weeks. The number for the replay is
800-642-1687 for U.S./Canada and 706-645-9291 for international
callers. The conference ID is: 17348240.
About NetScout Systems
NetScout Systems, Inc. (NASDAQ: NTCT) has been the industry
pacesetter for advanced network and service assurance solutions for
over a decade, and counts the world's largest enterprises, government
agencies, and service providers among its customers. Enterprise and
government IT organizations deploy NetScout's nGenius(R) Performance
Management System to increase service levels to their users by
reducing or preventing service disruptions. Service providers depend
on NetScout's proven IP performance management technology and
expertise to protect the quality of their customers' experience with
IP-based services. NetScout is headquartered in Westford,
Massachusetts and has offices worldwide. Further information is
available at http://www.netscout.com.
About Network General Corporation
Network General(TM), a privately held company based in San Jose,
California, is a leading provider of IT management solutions designed
to integrate and simplify troubleshooting and management across IT
domains, assuring the delivery of IT services. The Network General
portfolio consists of innovative software solutions and intelligent
appliances that proactively monitor and manage all elements of IT
infrastructure performance including network devices, applications,
and servers, while simultaneously delivering a correlated view of the
health of the business service. Network General's solutions drive down
the cost-per-managed network segment while providing IT professionals
with a full range of complementary products that assure delivery of
business-relevant IT services.
Safe Harbor:
Forward-looking statements in this release are made pursuant to
the safe harbor provisions of Section 21E of the Securities Exchange
Act of 1934 and other federal securities laws. Investors are cautioned
that statements in this press release, which are not strictly
historical statements, including the plans, objectives and future
financial performance of NetScout, constitute forward-looking
statements which involve risks and uncertainties. Actual results could
differ materially from the forward-looking statements. Risks and
uncertainties which could cause actual results to differ include,
without limitation, risks and uncertainties associated with the
satisfaction of the applicable closing conditions and receipt of
regulatory approvals for the acquisition, the Company's ability to
integrate the acquisition successfully, costs associated with the
acquisition, the ability to achieve market introduction and acceptance
of new products from the acquisition, difficulties in managing
geographically dispersed operations, and other factors relating to
acquisitions generally, as well as the Company's relationships with
strategic partners, dependence upon broad-based acceptance of the
Company's network performance management solutions, the Company's
ability to achieve and maintain a high rate of growth, introduction
and market acceptance of new products and product enhancements, the
ability of the Company to take advantage of service provider
opportunities, competitive pricing pressures, reliance on sole source
suppliers, successful expansion and management of direct and indirect
distribution channels and dependence on proprietary technology, and
risks of slowdowns or downturns in economic conditions generally and
in the market for network performance management solutions
specifically. For a more detailed description of the risk factors
associated with the Company, please refer to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 2007 and
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 on
file with the Securities and Exchange Commission. NetScout assumes no
obligation to update any forward-looking information contained in this
press release or with respect to the announcements described herein.
NetScout and the NetScout logo and nGenius are registered
trademarks of NetScout Systems, Inc. The CDM logo, MasterCare,
Progressive Analytics and the MasterCare logo, are trademarks of
NetScout Systems, Inc. Other brands, product names and trademarks are
property of their respective owners. NetScout reserves the right, at
its sole discretion, to make changes at any time in its technical
information and specifications, and service and support programs.
Network General, Business Container, networkDNA, and the Network
General logo are registered trademarks or trademarks of Network
General Corporation and/or its affiliates in the United States and/or
other countries. Only Network General Corporation makes Sniffer(R)
brand products. All other registered and unregistered trademarks
herein are the sole property of their respective owners. (C)2006
NETWORK GENERAL CORPORATION. ALL RIGHTS RESERVED
CONTACT: NetScout Systems, Inc.
Catherine Taylor, 978-614-4286
Director, Investor Relations
IR@netscout.com
or
Christine Johansen, 978-614-4113
Manager, Public Relations
johansenc@netscout.com
or
Davies Murphy Group, Inc.
Brian Alberti, 781-418-2403
netscout@daviesmurphy.com
SOURCE: NetScout Systems, Inc.