CyberGuard Corporation Acquires Webwasher AG
Transaction Adds Fast-Growing Spam Blocking and Content Filtering Company to CyberGuard Portfolio
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--April 26, 2004--CyberGuard Corporation (NASDAQ:CGFW), the technology leader in network security, today announced that it is acquiring German high-end content security vendor Webwasher AG. Under the terms of the agreement, which was signed yesterday, CyberGuard will pay $40 million in cash and CyberGuard shares and up to an additional $10 million on a contingent basis for all of the shares of Webwasher. Webwasher will operate as a wholly owned division of CyberGuard.
"Adding this fast-growing secure content management (SCM) company clearly shows that we are executing on our strategic vision of becoming a broad-based security company focused on delivering solutions aimed at Global 1000 companies and government customers around the world," said Pat Clawson, chairman and chief executive officer of CyberGuard. "Webwasher is the number one Web filtering provider in Germany and holds 40 percent of the market in Central Europe. More than 30 Fortune 500 companies, including Motorola, Texas Instruments and Sprint, use their SCM solution. In addition to enhancing our security offering, this acquisition shows our commitment to growth and expansion in key world markets - the US, Germany and Japan."
CyberGuard anticipates that the transaction will be accretive to earnings per share in the 12 months following closing. The purchase price will be paid $8 million in cash and the remainder in stock. An earn-out provision allows for up to an additional $10 million in stock subject to Webwasher achieving certain revenue and profit targets through CyberGuard's fiscal year ending June 30, 2005. Webwasher achieved $7.7 million in revenues in 2003, more than doubling their revenues for the prior year, and continued to show strong revenue growth for the quarter ended March 31, 2004. Venture capital firms Siemens Venture Capital, Invision and TecVenture, who backed Webwasher as it built its business, are the primary sellers.
"We are creating a broad-spectrum security offering of enterprise-class, best-of-breed technologies. Webwasher has designed the world's best content, spam, URL and e-mail filtering into a single, integrated solution," stated Clawson. "The latest blended threats and worms like Bagle can only be stopped effectively by a combination of application firewall plus application layer content filtering. Together, our products comprise a very compelling joint offer."
"We are very excited about this transaction," stated Dr. Horst Joepen, chief executive officer of Webwasher. "We have made Webwasher a technology leader in the content security space and the leading European-based vendor. Joining forces with a leading US security partner that matches our positioning of focusing on customers who require the very highest level of security is a major step forward. The combination with CyberGuard, a true technology leader in firewalls and VPNs, enables us to serve our target markets, customers and channels worldwide on a much stronger financial basis. This transaction opens up incredible new opportunities and markets for the combined CyberGuard and Webwasher entity and its product suite."
Joepen added that the two companies complement each other because they share a number of common traits. "Both our firms come from a large corporate background, having spun out of global engineering and technology leaders, Harris Corporation from the US and Siemens AG of Germany. These corporate parents laid the foundation for staying at the cutting edge of technology R&D and providing a highly discerning customer environment that gives us unique insights into the needs of high-end user organizations. There is a perfect fit between our teams as we work together going forward to even better satisfy our customers."
"Webwasher is an excellent acquisition for CyberGuard," stated Brian Burke, research manager at industry research firm IDC, which showed Webwasher to be the fastest growing Web filtering provider in a recent report. "We believe Webwasher brings a unique approach to an emerging market segment. In addition to their unique ability to centralize virus scanning and Internet policy enforcement for several protocols under a single management interface, the fact that Webwasher can monitor HTTPS (hyper text transfer protocol that requires an SSL or secure sockets layer connection) further differentiates them from traditional SCM vendors who only focus on the Web and/or e-mail. Considering the increasing amount of encrypted traffic moving in and out of an organization, IDC believes that SCM solutions which address HTTPS will be an essential component for organizations that use the Internet and e-mail as part of their daily business operations. This will be especially important in financial and healthcare industries so organizations can safely exchange sensitive information while ensuring compliance with government regulations."
The Web filtering and e-mail security market is projected by IDC to have a 31 percent compound annual growth rate (CAGR) from 2002 to 2007, expanding from $506 million in 2002 to $1.93 billion in 2007. IDC projects that the appliance-based secure content management market will grow from $109 million to $1.6 billion over that same period for a 70 percent CAGR.
Conference Call Information
CyberGuard will discuss the acquisition during a conference call at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time), on Monday, April 26, 2004. To participate, please dial 706-645-9750 and ask for conference ID number 7075557. A recording of the conference call proceedings will be available two hours after the call's conclusion on April 26 until midnight Eastern Time on May 4, 2004. Both U.S. and international callers may listen to the recording by dialing 706-645-9291 and requesting conference ID number 7075557.
About CyberGuard Corporation
CyberGuard Corporation (NASDAQ: CGFW), the technology leader in network security, provides advanced Total Stream Protection(TM) solutions that protect the critical information assets of Global 2000 companies and governments worldwide. CyberGuard offers a broad line of scalable high performance firewall/VPN appliances, sophisticated security processors and accelerator products for the SSL and IPsec markets, and industry leading embedded Linux and Linux security solutions. Headquartered in Ft. Lauderdale, Florida, the company has branch offices and training centers around the world. More information about CyberGuard Corporation can be found at http://www.CyberGuard.com.
About Webwasher
Webwasher AG, a technology spin-off from Siemens AG, is a privately held provider of Internet security solutions for corporations, educational institutions and government agencies. Webwasher develops and markets innovative products for the growing content security management/policy enforcement tool market, and has been named the fastest-growing provider of Web filtering solutions by research firm IDC. Products include standalone and integrated solutions for Internet content security and filtering, including URL filtering, e-mail and spam filtering, virus protection, SSL filtering, Instant Message/Peer-to-Peer blocking and Internet usage reporting. Webwasher products are deployed by more than 6000 companies worldwide, including more than 30 Fortune 500 companies. Webwasher has established reseller and strategic partnerships with major organizations including Network Appliance, IBM, Computer Associates and Network Associates. More information about Webwasher can be found at http://www.Webwasher.com.
Forward-Looking Statements
Statements regarding estimates, expectations and future prospects contained in this press release are forward-looking statements. These statements are based upon assumptions and analyses made by the Company in light of current conditions, future developments, and other factors the Company believes are appropriate in the circumstances, or information obtained from third parties, and are subject to a number of assumptions, risks and uncertainties. Readers are cautioned that forward-looking statements are not guarantees and that actual results might differ materially from those suggested in the forward-looking statements. Some of the factors that might cause future actual events to differ from those predicted or assumed include: future advances in technologies and computer security; the Company's history of losses; the Company's ability to execute on its business plans; the Company's dependence on outside parties such as its key customers and alliance partners; competition from major computer hardware, software, and networking companies; uncertainties in availability of expansion capital in the future and other risks associated with capital markets; overall network security spending; global economic conditions; and the outcome of a class action lawsuit against the Company. For a more complete discussion regarding forward-looking statements, the reader is referred to the Company's periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, including the Form 10-K for the fiscal year ended June 30, 2003, and other information filed with the Commission.
CyberGuard(R) is a registered trademark and Total Stream Protection(TM) is a trademark of CyberGuard Corporation. All other trademarks are property of their respective owners.
Contacts
MPB Communications
Cynthia Sucher, 407-622-4700 (o)
407-595-0142 (c)
csucher@mpbc.cc
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