The two strikingly similar companies--both make software and tools to observe and manage corporate computer systems running Microsoft Windows NT and Windows 2000 platforms--are calling the deal a "merger of equals," but Mission Critical stockholders are coming out slightly ahead, receiving 0.9413 share of NetIQ for each Mission Critical share.
In related news, Houston-based Mission Critical agreed to acquire Ganymede Software, a privately held company that makes network performance management software, for about $171.2 million.
NetIQ, headquartered in Santa Clara, Calif., and Mission Critical plan to provide e-commerce and corporate customers, as well as application service providers, with infrastructure management solutions for systems running Microsoft NT and 2000 platforms. The new $2.7 billion company's potential for rapid growth hinges on the acceptance of Windows 2000, which was launched earlier this month.
The new company will be headquartered in Santa Clara, with key executives, development and operational personnel in Houston. The two companies, which went public last summer, had combined revenue of approximately $63 million last year.
Michael Bennett, currently Mission Critical's chairman, president and chief executive officer, will be executive chairman of the new company. Ching-Fa Hwang, currently president and chief executive officer of NetIQ, will be chief executive officer.
Each company's stockholders will receive shares representing about 50 percent of the new company on a diluted basis. The merger will be accounted for as a purchase and is expected to be tax-free to the stockholders of both companies. The deal, expected to close during the June 2000 quarter, is subject to regulatory approvals, approval by the stockholders of both companies, and customary closing conditions.
At the closing of the merger, the companies expect to create a new corporate name and stock symbol.
For the Ganymede acquisition, Mission Critical will issue 2.75 million shares and options in a transaction to be accounted for as a purchase. Based on Mission Critical Software's closing share price of $62.25 on Friday, the total value of the transaction would be approximately $171.2 million.
Ganymede had revenue of about $10 million for last year.