Computer Associates Moves to Acquire Netegrity

Oct. 8, 2004
All cash merger transaction valued at approximately $430 million, identity and access management

Computer Associates International announced this morning in a news release that the company has agreed to acquire Netegrity, a provider of security software solutions, in an all cash merger that is valued at approximately $430 million or $10.75 per fully diluted common share. The transaction is also worth approximately $340 million net of the cash and marketable securities on Netegrity's balance sheet.

The acquisition is subject to customary regulatory approvals and the approval of Netegrity's shareholders, and is expected to be completed within the next 90 days. Stockholders representing approximately 10 percent of the outstanding Netegrity shares have agreed to vote in favor of the transaction.

CA's Chief Executive Officer Kenneth Cron commented on the importance of adding security to the CA portfolio.

"By adding the best Web security product on the market to its portfolio, CA significantly strengthens its leading position in identity and access management (IAM)," said Cron. "Security continues to be critically important to CA, and we will ensure that we offer customers the broadest and deepest IAM suite in the industry."

The acquisition is expected to be neutral in fiscal 2005 and slightly accretive in fiscal 2006 on a GAAP basis through cost synergies alone.

CA's Chief Operating Officer Jeff Clarke said the acquisition was a sound financial decision. "This acquisition will deliver a financial return in excess of our weighted average cost of capital," said Clarke. "In addition, we believe there is the potential for substantial upside through revenue synergies."

According to the company's news release, Netegrity's operations will be integrated with CA's eTrust Identity and Access Management group, and CA is undergoing evaluation of the costs that will follow from the integration. CA anticipates that most of Netegrity's approximately 400 employees will remain employed with CA.