Enterasys to Be Acquired
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.
Enterasys Networks Inc.