[isalist] FW: WatchGuard Acquired By Private Equity Firm In $151 Million Deal

From: "Thomas W Shinder" <tshinder@xxxxxxxxxxx>
To: <isalist@xxxxxxxxxxxxx>
Date: Wed, 26 Jul 2006 08:25:36 -0500
Oh yea, we already knew that Watchguard blows -- here's the proof.
 
Thomas W Shinder, M.D.
Site: www.isaserver.org <http://www.isaserver.org/> 
Blog: http://blogs.isaserver.org/shinder/
Book: http://tinyurl.com/3xqb7 <http://tinyurl.com/3xqb7> 
MVP -- ISA Firewalls

 

________________________________

From: USEast News Service [mailto:News@xxxxxxxxxxxxxxxxxxxxx] 
Sent: Wednesday, July 26, 2006 6:56 AM
To: USEast News Service
Subject: WatchGuard Acquired By Private Equity Firm In $151 Million Deal


 

WatchGuard Acquired By Private Equity Firm In $151 Million Deal 

(URL: 
http://www.crn.com/sections/breakingnews/breakingnews.jhtml;jsessionid=A
AAMNZ42WITCGQSNDLRCKH0CJUNN2JVN?articleId=191101509) 

By Kevin McLaughlin <mailto:kmclaughlin@xxxxxxx> , 


7:16 PM EDT Tue. Jul. 25, 2006 

Security vendor WatchGuard Tuesday announced it has agreed to be
acquired by Francisco Partners, a Menlo Park, Calif.-based private
equity fund, ending months of industry speculation about the struggling
company's future plans. 

The $151 million cash-only deal will net WatchGuard shareholders $4.25
per share and is expected to close during the fourth quarter, subject to
shareholder approval. WatchGuard employees holding about 5.8 percent of
the company's outstanding shares have already indicated their support
for the acquisition, according to the Seattle-based vendor. 

"We believe that this transaction is the right decision for our
shareholders, customers, partners and employees," said Ed Borey,
chairman and chief executive officer of WatchGuard, in a statement. 

WatchGuard has been a takeover target for the past several months. In
February, San Francisco-based Vector Capital Corporation purchased 9.4
percent of WatchGuard and inquired about purchasing the rest of the
company. But in April, WatchGuard announced it had hired Wachovia
Securities to examine "strategic alternatives". In late May, Vector
offered $5.10 per share, but then cut the bid to $4.65 per share a month
later, citing "due diligence". 

Now that a deal has been reached, WatchGuard can focus on responding to
the market faster, says Carl Mazzanti, CEO of eMazzanti Technologies, a
Hoboken, N.J.-based solution provider. "[WatchGuard] is no longer in an
uncertain state and [the acquisition] should give the market confidence
that management and WatchGuard's backing just got drastically more
sophisticated," said Mazzanti. 

However, it will take some time for WatchGuard to repair the damage that
has occurred over the past year related to issues with its Fireware Pro
appliance
<http://www.crn.com/showArticle.jhtml;jsessionid=L25OSAO1KBIU0QSNDLPCKHS
CJUNN2JVN?articleID=190400073> , said one partner, speaking on condition
of anonymity. Problems with the Fireware Pro operating system and the
WAN failover feature in version 8.0 have negatively affected
WatchGuard's image in the channel and have likely cut into the vendor's
sales, the source added. 

Watchguard officials recently told CRN that Version 8.3 of Fireware Pro,
unveiled June 22, addresses problems with the product. 

In WatchGuard's first quarter earnings call in May, the vendor reported
a net loss of $4.1 million, or $0.12 per share, in Q1 2006 compared to a
net loss of $1.3 million, or $0.04 per share, in the previous quarter,
and a net loss of $3.9 million, or $0.12 per share, in Q1 2005. 

After closing Monday trading at $3.73, WatchGuard shares had rebounded
.40 to $4.10 at the close of Tuesday trading. 

Dan Neel contributed to this report
[isalist] FW: WatchGuard Acquired By Private Equity Firm In $151 Million Deal

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