Enterasys Networks Agrees to be Acquired by Private Investment Firms for $386 Million, or $13.92 Per Share
14 11์ 2005 - 10:58PM
Business Wire
Company gains financial resources and flexibility to succeed in
industry consolidation Enterasys Networks, Inc. (NYSE: ETS), the
Secure Networks Company(TM), today announced that it has signed a
definitive merger agreement to be acquired by an investment group
led by the private investment firms The Gores Group, LLC ("Gores")
and Tennenbaum Capital Partners, LLC ("Tennenbaum") for $386
million. The Board of Directors of Enterasys has approved the
transaction based upon the unanimous recommendation of a Special
Committee of independent directors. Under the terms of the
agreement, each outstanding share of Enterasys common stock will be
converted into the right to receive $13.92 in cash, representing a
premium of 32 percent over the closing price on the New York Stock
Exchange on November 11, 2005. The transaction, which is expected
to be completed in the first quarter of fiscal 2006, is subject to
approval by Enterasys shareholders and other customary closing
conditions, including regulatory approvals. Mark Aslett, president
and chief executive officer of Enterasys, said, "This transaction
provides our shareholders with a substantial premium over the
current market and enterprise values of the Company. The price
reflects our success in repositioning Enterasys and returning it to
a solid operational and financial position, as demonstrated by our
strong Q3 results. Looking forward, we believe operating as a
private company with the backing of Gores and Tennenbaum will
enable us to capture market opportunities not available to
Enterasys today. Both investment firms have a long-term view and
established track records of successfully working with company
management to help companies succeed, especially in industries
expected to see significant change. "We anticipate that this
combination will enable Enterasys to enhance the value it delivers
to customers, partners, employees and other constituencies as we
leverage our leadership position in secure networking," continued
Aslett. "The transaction would not have been possible without the
dedication of all our employees. It builds on their hard work over
the last several years by adding resources and creating a new
platform for Enterasys to actively participate in future networking
industry consolidation. The Company's current senior management
team will continue to lead Enterasys, with corporate headquarters
remaining in Andover, Massachusetts," concluded Aslett. Alec E.
Gores, chairman and founder of Gores, said, "Enterasys has
world-class technology, an impressive customer base, outstanding
employees and a proven management team--which are qualities we look
for in an investment. With the added support, financial resources
and specialized expertise of Gores and Tennenbaum, we believe
Enterasys can create even greater value for enterprise customers
through continued technology leadership and by pursuing growth
opportunities we see in the industry." Michael E. Tennenbaum,
senior managing partner of Tennenbaum, said, "We are particularly
pleased to partner with The Gores Group and Enterasys in moving
Enterasys to a new level of success. This transaction provides
operational support and financial resources that will enable
Enterasys to be a more formidable competitor in the global market
for enterprise networking solutions." JPMorgan Securities, Inc.
served as financial advisor to the Company and the Special
Committee, and Ropes & Gray LLP acted as legal advisor to the
Board of Directors in connection with the transaction. Conference
Call Enterasys will host a conference call regarding this
announcement today, Monday, November 14, 2005, at 2:00 p.m. EST. A
live Webcast of the call will be accessible from the "Investors"
section of the Enterasys Web site at
www.enterasys.com/corporate/ir/. The call will be available for
replay through November 21, 2005. To access the replay, dial
888-286-8010 and enter pass code 30172787, or visit the "Investors"
section of Enterasys' Web site. About Enterasys Networks Enterasys
Networks is the Secure Networks Company(TM), providing enterprise
customers with innovative network infrastructure products, services
and solutions that deliver the security, productivity and
adaptability benefits required by Global 2000 organizations. For
more information on Enterasys Secure Networks and the company's
products, including multilayer switches, core routers, WAN routers,
wireless LANs, network management, and intrusion defense systems,
visit www.enterasys.com. About The Gores Group LLC Founded in 1987,
Gores is a private investment firm focused on the technology,
telecommunications, and business services sectors. The firm
combines the seasoned M&A team of a traditional financial buyer
with the operational expertise and detailed due diligence
capabilities of a strategic buyer. Gores has a long standing record
of creating sustainable value in its portfolio companies by
focusing on customers and employees, supporting management with
operational expertise and providing the capital required for
growth. Recent transactions include, among others, Anker Systems in
the United Kingdom, for which a public offering was recently
completed, WireOne, VSPAN, Proxicom, Global Tel*Link and National
Public Markets Company, which was purchased from AT&T.
Headquartered in Los Angeles, California, Gores maintains offices
in Boulder, Colorado; New York; Zurich and London. For more
information, please visit www.gores.com. About Tennenbaum Capital
Partners, LLC Tennenbaum Capital Partners is a Santa Monica,
California-based private investment firm managing over $3.7 billion
in assets through private funds. The firm's investment strategy is
grounded in a long-term, value approach, and it assists - both
financially and operationally - transitional middle market
companies in such industries as technology, healthcare, energy,
aerospace, business services, retail and general manufacturing.
Tennenbaum's core strengths include in-depth knowledge of equity
and debt financing vehicles in the public and private markets, as
well as a thorough understanding of special situations. For more
information, please visit www.tennenbaumcapital.com Proxy
Information In connection with Enterasys' solicitation of proxies
with respect to the meeting of shareholders to be called with
respect to the proposed merger, Enterasys will file with the
Securities and Exchange Commission (the "SEC"), and will furnish to
its shareholders a proxy statement. Shareholders are advised to
read the proxy statement when it is finalized and distributed to
shareholders because it will contain important information.
Shareholders will be able to obtain, without charge, a copy of the
proxy statement (when available) and other relevant documents filed
with the SEC from the SEC's Web site at www.sec.gov. Shareholders
will also be able to obtain, without charge, a copy of the proxy
statement and other relevant documents (when available) on the Web
at www.enterasys.com, or by directing a request by mail or
telephone to Enterasys Networks, Inc., 50 Minuteman Road, Andover,
MA, 01810, Attention: Investor Relations; Telephone: 978-684-1473.
Enterasys and certain of its directors, executive officers and
other members of management and employees may, under the rules of
the SEC, be deemed to be "participants" in the solicitation of
proxies from Enterasys' shareholders in favor of the proposed
merger. Information regarding the persons who may be considered
"participants" in the solicitation of proxies will be set forth in
Enterasys' proxy statement relating to proposed merger when it is
filed with the SEC. Information regarding certain of these persons
and their beneficial ownership of Enterasys common stock as of
August 30, 2005, is also set forth in the Schedule 14A filed by
Enterasys on September 15, 2005, with the SEC. This news release
contains forward-looking statements regarding future events,
activities and financial performance, such as management's
expectations regarding future revenue and cash flow; strategic
relationships and market opportunities; product development; and
other business strategies and objectives. These statements may be
identified with such words as "we expect," "we believe," "we
anticipate," or similar indications of future expectations. These
statements are neither promises nor guarantees, and actual future
financial performance, events and activities may differ materially.
Readers are cautioned not to place undue reliance on these
statements, which speak only as of the date hereof. We expressly
disclaim any obligation to update such statements publicly to
reflect changes in the expectations, assumptions, events or
circumstances on which such statements may be based or that may
affect the likelihood that actual results will differ materially.
Some risks and uncertainties that may cause actual results to
differ materially from these forward-looking statements include,
but are not limited to: risks associated with the proposed merger;
worldwide and regional economic uncertainty and recent political
and social turmoil may continue to negatively affect our business
and revenue; we have a history of losses in recent years and may
not operate profitably in the future; our quarterly operating
results may fluctuate, which could cause us to fail to meet
quarterly operating targets and result in a decline in our stock
price; we earn a substantial portion of our revenue for each
quarter in the last month of each quarter, which reduces our
ability to accurately forecast our quarterly results and increases
the risk that we will be unable to achieve previously forecasted
results; we continue to introduce new products, and if our
customers delay product purchases or choose alternative solutions,
or if sales of new products are not sufficient to offset declines
in sales of older products, our revenue could decline, we may incur
excess and obsolete inventory charges, and our financial condition
could be harmed; we may be unable to upgrade our indirect
distribution channels or otherwise enhance our selling
capabilities, which may hinder our ability to grow our customer
base and increase our revenue; we have experienced significant
changes in senior management and our current management team has
been together for only a limited time, which could limit our
ability to achieve our objectives and effectively operate our
business; there is intense competition in the market for enterprise
network equipment, which could prevent us from increasing our
revenue and achieving profitability; a portion of the enterprises
we sell to rely in whole or in part on public funding and often
face significant budgetary pressure, and if these customers must
delay, reduce or forego purchasing from us, our revenues could be
harmed; we depend upon a limited number of contract manufacturers
for substantially all of our manufacturing requirements, and the
loss of any of our primary contract manufacturers would impair our
ability to meet the demands of our customers; and those additional
risks and uncertainties discussed in our most recent filings with
the Securities and Exchange Commission, including our quarterly
report on Form 10-Q for the fiscal quarter ended October 1, 2005.
Enterasys (NYSE:ETS)
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Enterasys (NYSE:ETS)
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