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Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail [email protected] with your contact information.

Archives > Transaction Case Study #15

AttachmateWRQ acquiring NETIQ Corporation

Dear Colleague, 

On June 20, 2006, NetIQ Corp. (Nasdaq:NTIQ) and AttachmateWRQ (privately held) announced that NetIQ stockholders, voted to approve NetIQ's previously announced acquisition by AttachmateWRQ. The companies anticipate that the acquisition will close by the end of the month. Upon completion of the acquisition, NetIQ shares will cease trading on Nasdaq. The transaction is valued at $12.20 per share in cash, or approximately $495 million. 

NetIQ is a systems and security management software vendor. AttachmateWRQ has a range of solutions that include legacy integration ,security and desktop management.

The $12.20 per share price offered was a 13.8% premium over the $10.72 per share price just before the acquisition was announced on April 27th.   

NetIQ, with $189.43 million (ttm) in revenues, had a market cap at the time of the announcement of $432.23 million. The Company has $191.51 million in cash.  Based on the $495 million sale price, Enterprise Value is about $300 million. This means that AttachmateWRQ is paying 1.58x revenue.  NetIQ is just above cash flow breakeven and EBITDA is negligible. 

NetIQ's revenues have been declining the last several years and profitability has been elusive.  The acquisition by AttachmateWRQ, owned by an investment group led by Golden Gate Capital, Francisco Partners and Thoma Cressey Equity Partners is almost certainly heavily leveraged.  While there have been no announcements, we speculate that substantial force reductions and tight streamlining of operations will be required in order to generate the returns for the acquisition. 

Together, AttachmateWRQ and NetIQ will comprise a $400 million company, serving over 40,000 customers in over 60 countries, with near complete market penetration of the Global 10,000.  

"The combination of AttachmateWRQ and NetIQ creates a formidable enterprise software company with greater resources and scale," said Jeff Hawn, chairman, president and CEO at AttachmateWRQ. "Together, we are well-positioned to better serve our combined customer base with more products and resources than ever before." 

Chuck Boesenberg, chairman and CEO of NetIQ. "The board and management team of NetIQ determined, after a detailed review of all alternatives, that the best option to maximize shareholder value and to better execute on NetIQ's strategy is through an acquisition by AttachmateWRQ." 

We hope that you find this feature from Sokoloff & Co. interesting, informative and useful.  We welcome your comments and suggestions. 

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