NetScreen to Acquire Neoteris

NetScreen Technologies to acquire SSL VPN and application security gateway leader Neoteris for about $245M in stock and $20M in cash

October 6, 2003

4 Min Read

SUNNYVALE, Calif. -- NetScreen Technologies, Inc. (Nasdaq: NSCN) today announced that it has signed a definitive agreement to acquire Neoteris®, Inc., the market leader in the SSL virtual private network (VPN) product category as well as a leader in the application security gateway market, for approximately $245 million in stock and $20 million in cash at the closing, including assumption of all outstanding Neoteris options. Upon the achievement of certain revenue milestones, NetScreen will pay Neoteris stockholders and optionholders up to an additional $30 million in cash.

Upon close, the acquisition will expand NetScreen’s product portfolio to include Neoteris’ market leading “clientless” SSL VPN remote access solution that enables an enterprise remote user, telecommuter, or extranet partner to easily and securely access corporate resources via a standard Web browser. NetScreen will also leverage Neoteris’ technology and expertise to accelerate the integration of application-level security into the network infrastructure.

Neoteris’ enterprise-class SSL VPN remote access solution complements NetScreen’s current network security product portfolio of hardware-based network security solutions, allowing NetScreen to offer the industry’s broadest range of secure access solutions – spanning enterprise site-to-site, employee remote access and partner extranet communications – and positioning NetScreen to capitalize on the emerging SSL-based remote access market, which research firm Infonetics Research estimates will exceed $600 million by 2006.

“While IPSec is the best technology for site-to-site VPN deployments, we believe Neoteris’ advanced SSL VPN solutions will become the preferred solution for new, and expansion of existing, remote access deployments,” said Robert Thomas, president and CEO of NetScreen. “This acquisition will not only strengthen our portfolio of end-to-end security offerings, it will allow us to drive adoption of SSL VPN technology as the preferred option for remote access deployments and position NetScreen for success in this growing market.”

Neoteris has more than 550 customers, including large enterprises and organizations, such as Deutsche Bank, Borland Software Corporation, SAS, and others, as well as approximately one million users worldwide.

“Our clientless SSL solution has been well received and adopted by many highly recognized enterprise customers,” said Krishna "Kittu" Kolluri, president and CEO of Neoteris, who will join NetScreen as general manager responsible for NetScreen’s secure access products. “With NetScreen’s complementary products, growing enterprise customer-base and strong channel, we believe this combination can help increase market success and accelerate customer adoption of our SSL VPN products, as well as our complementary application security gateway solutions.”

In addition to its SSL VPN solutions, Neoteris’ application security gateways will bring to NetScreen’s portfolio new access management functionality, including the ability to implement forms- and header-based Web single sign-on (SSO), password management integration and cross-enterprise online meeting functionality. This will enable NetScreen to capitalize on market opportunities beyond the traditional employee remote access security market and the complementary IPSec VPN, firewall and intrusion detection and prevention markets in which NetScreen currently participates.

Neoteris’ SSL VPN remote access solution uses a centrally located appliance to provide secure access to corporate resources - such as enterprise applications, email, and files stored on the corporate intranet - without having to deploy and manage a VPN client on each remote device. Since this clientless solution allows enterprise IT departments to offer secure access to a broad array of corporate resources without requiring the replication and deployment of application servers into the demilitarized zone (DMZ), it can significantly reduce deployment time and total cost of ownership for customers.

Numerous independent authorities have recognized Neoteris’ SSL VPN category leadership. For 1H’03, Gartner, Inc., listed Neoteris in the Leader Quadrant in its SSL VPN Magic Quadrant report, while Frost & Sullivan awarded Neoteris the Market Leadership Award for garnering the SSL VPN industry’s leading market share in 1H’03. In-Stat/MDR has also named Neoteris as the market share leader in 2002 global SSL VPN product revenue. In addition, Frost & Sullivan named Neoteris the Entrepreneurial Company of the Year Award for 2003. Neoteris has earned more than 12 industry awards in 2003 alone.

The closing of the acquisition is subject to customary conditions, including antitrust clearance, and is expected to occur by the end of 2003. NetScreen plans to make Neoteris products available soon after the transaction is completed.

NetScreen Technologies Inc.

Neoteris Inc.

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