Mission Critical and NetIQ merge in $1.42 billion deal

Rivals Mission Critical Software, Inc. (Nasdaq: MCSW) and NetIQ Corp. (Nasdaq: NTIQ) are teaming up in a stock-swap valued at about $1.42 billion, the companies said Monday.

The merger of equals will improve their position in the e-business infrastructure and Windows NT- and Windows 2000-based markets.

The deal is being billed as a merger of equals. Mission Critical shareholders will 0.9413 shares of NetIQ for each Mission Critical share. NetIQ closed Friday at $73.50, which values each Mission Critical share at $69.185. Mission Critical closed at $62.25, down 25 cents a share.

NetIQ's stock has seen a steady climb since its IPO in July. Mission Critical, made its debut in August.

The deal, unanimously approved by the boards of directors of both companies, will create a combined company with a current market value in excess of $2.7 billion. The two companies had combined revenue of approximately $63 million for the twelve months ended December 31.

Both companies depend on the success of Microsoft's (Nasdaq: MSFT) Windows 2000 product, which is "clearly poised to be a platform of choice for the new era of eBusiness" said Mission Critical Software's chairman, president and CEO Michael S. Bennett in a company statement.

Bennett will be executive chairman of the new company. Ching-Fa Hwang, president and CEO of NetIQ, will become chief executive officer.

At the closing of the merger, expected during June 2000, the companies expect to create a new corporate name and stock symbol.

In a separate transaction, Mission Critical Software has also agreed to acquire Ganymede Software, Inc., a privately held company that makes end-to-end network performance management software for about $171.2 million.

Mission Critical's acquisition of Ganymede will allow customers to measure transaction performance across all eBusiness infrastructure components, including applications, network, directory, and servers, the companies said.

Under the terms of that deal, Mission Critical will issue 2.75 million shares and options in a transaction to be accounted for as a purchase. Ganymede had revenue of around $10 million for the year ended December 31.

The acquisition of Ganymede is expected to close during the June 2000 quarter, at or prior to the closing of the merger with NetIQ.