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Filed by Visual Networks , Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant
to Rule 14a-12 of the Securities Exchange Act of 1934.
Subject Company: Visual Networks, Inc.
Commission File No. 000-23699
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On February 7, 2000, Visual Networks, Inc. issued the following press
release relating to its proposed acquisition of Avesta Technologies, Inc.
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FOR IMMEDIATE RELEASE
PRESS CONTACTS:
Debra Eisenberg Susana Thompson
Visual Networks The Harbor Group
301-296-2295 978-526-1601
[email protected] [email protected]
INVESTOR CONTACT:
Angela Tandy
Visual Networks
301-296-2394
[email protected]
VISUAL NETWORKS ACQUIRES AVESTA TECHNOLOGIES TO
CREATE LEADING FORCE IN SERVICE MANAGEMENT MARKET
-- Combined product portfolio gives service providers and enterprises the
systems they need to deploy e-commerce solutions quickly and confidently --
ROCKVILLE, MD -- FEBRUARY 7, 2000 -- Visual Networks, Inc. (NASDAQ: VNWK) - the
leading provider of service management solutions for the Internet - today
announced that it has signed a definitive agreement to acquire Avesta
Technologies, Inc., a privately held provider of next-generation
event-management solutions, in an all-stock transaction valued at approximately
$415 million.
By combining Avesta Technologies' next-generation event management
and applications monitoring capability into its product portfolio, Visual
Networks is responding to the growing trend among enterprises to outsource
their networks and applications to service providers. This rapid shift in
market dynamics has created a need for end-to-end service management that
integrates networks, systems, and applications into a unified service view for
service providers and their enterprise customers. The companies' combined
product set answers this need by giving customers the systems required to
deploy e-commerce solutions quickly and confidently.
With the acquisition of Avesta Technologies, Visual Networks will be
able to provide its traditional carrier and ISP customer base with unparalleled
fault and event management and application monitoring solutions. Visual
Networks' expanded product portfolio gives customers the ability to manage
real-time and historical availability and performance on an end-to-end basis
across all service definitions - from base transport services through and
including hosted applications services. Additionally, this acquisition expands
Visual Networks' market opportunity to include large enterprise IT
organizations as well as the rapidly emerging applications service provider
(ASP) market.
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"Visual Networks is changing the playing field for service
management," said Scott Stouffer, president and CEO, Visual Networks. "Instead
of having to integrate products from many small vendors, our ISP, ASP,
enterprise, and traditional service provider customers will now have a unified
strategic partner."
"This combination represents a critical piece of our articulated
strategy to become the largest service management vendor with the industry's
broadest portfolio of products and functionality," added Stouffer. "As a
combined entity, we can offer a broad solution set for managing the Internet
infrastructure end-to-end - from client to servers to host computers - as well
as the underlying transport infrastructure."
Visual Networks is projecting the new organization's top-line revenue
will grow by 50 percent in 2000 and 2001.
Avesta Technologies President and CEO Kam Saifi said, "The market is
ready for a comprehensive service management solution, and this union of our
two companies will bring us, our customers and the rapidly growing market that
much closer to a single-vendor solution."
Once the transaction is closed, Saifi will join the Visual Networks'
Board of Directors and assume his new role as executive vice president.
The two companies are expected to operate on an integrated basis with
the integration expected to be completed within three to four months of the
close of the acquisition.
Avesta Technologies employs approximately 165 people in four domestic
and three international offices. Employees of Avesta Technologies will become
employees of Visual Networks. No layoffs are expected.
FINANCIAL CHARACTERISTICS
Under the terms of the agreement, Visual Networks will purchase all
outstanding shares of Avesta Technologies' capital stock for approximately 6.5
million shares of Visual Networks' common stock. The agreement contains
additional earn-out provisions for Avesta Technologies, contingent on future
milestones, which will be paid in additional Visual Networks shares. The
transaction has been approved by both companies' Board of Directors and is
expected to close early in the second calendar quarter subject to approval of
Visual Networks' stockholders, and other customary closing conditions. The
transaction is to be accounted for by the purchase method and is to be treated
as a tax-free reorganization for federal income tax purposes.
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Visual Networks expects to invest heavily in R&D and sales and
marketing for Avesta Technologies' products causing operating losses for those
products through the end of 2001. As a result, this acquisition is expected to
be significantly dilutive through 2001 and accretive thereafter.
AVESTA TECHNOLOGIES, INC.
Founded in 1996 by former senior information technology executives
from the financial services industry, Avesta Technologies is a leading provider
of software solutions that manage the infrastructure of e-business. It
provides software for service providers, Internet companies, other corporations
and government agencies. Avesta's software provides a simple and rapid way for
organizations to detect service disruptions, isolate their root causes and
identify their business impact. Headquartered in New York City and privately
held, the company currently employs approximately 165 people. Avesta's
extensive client base includes global financial institutions,
telecommunications and service providers, and dot-com industry leaders. The
company operates in six locations, including offices in San Jose, CA; Silver
Spring, MD; Plano, TX; Ottawa, ON; Singapore; and London, UK.
ABOUT VISUAL NETWORKS
Visual Networks, Inc. is the market leader in providing service
management solutions for New World networks. The company provides reliable
network infrastructure for the Internet and IP corporate networks whether they
are running on frame relay, ATM, IP VPN, or any other transport technologies.
Utilizing Visual Networks systems such as Visual UpTime(R) and Visual IP
InSight(TM), service providers and their subscribers can increase network
reliability, dramatically reduce operational expenses, and lower their
customers' total cost of ownership. Visual Networks' headquarters are located
in Rockville, Maryland, with sales offices nationwide. For sales information
call 1.800.240.4010 or visit www.visualnetworks.com.
This press release may contain forward-looking information within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and is subject to the safe harbor created by those
sections.
Visual Networks assumes no obligation to update the information contained in
this press release. Visual Networks' future results may be impacted by its
ability to continue to implement its provider deployment model, its lengthy
sales cycle, dependence upon its major customers, risks associated with the
integration of acquisitions, risks associated with rapid technological change
and the emerging services market, potential fluctuations in its quarterly
operating results, its dependence on sole and limited source suppliers and
fluctuations in component pricing and its dependence upon key employees. Visual
Networks' future results may be impacted by other risk factors listed from time
to time in its SEC reports, including, but not limited to, the Company's
Registration Statement on Form S-3 dated November 1, 1999, its Form 10-Qs and
its Annual Report on Form 10-K.
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EDITORS NOTE:
Members of the working media and analyst community are invited to participate
in a conference call with Scott Stouffer and Kam Saifi regarding Visual
Networks' acquisition of Avesta Technologies.
To participate, please dial 800-547-5077 (USA) or 320-269-7956 (International)
beginning at 10:35 A.M.
If you are unable to participate in the conference call, a replay will be
available from 3:30 P.M. EDT on February 7 through 11:45 P.M. EDT on February
8. To access the replay, please dial 800-475- 6701 (USA) or 320-365-3844
(International) and enter access code 501663.
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Visual Networks will be filing a proxy statement/prospectus and other relevant
documents relating to the proposed acquisition with the Securities and
Exchange Commission. Investors are urged to read the proxy
statement/prospectus, together with any amendments to it and any other relevant
documents filed by Visual Networks, when they become available because they
will contain important information. Investors can obtain these and any other
documents filed by Visual Networks with the Securities and Exchange Commission
without charge at the internet web site of the Securities and Exchange
Commission at http://www.sec.gov. In addition, any documents that may be
incorporated by Visual Networks by reference in the proxy statement/prospectus
will be available without charge from Visual Networks as will be described in
the proxy statement/prospectus. You should read the proxy statement/prospectus
carefully before making a decision concerning the proposed acquisition.
Visual Networks and its board of directors will be soliciting proxies from
Visual Networks' stockholders in favor of the proposed acquisition. Visual
Networks' board of directors is comprised of Ted McCourtney, Theodore Joseph,
Grant Behrman, Thomas Smith, Marc Benson, William Smith, Scott Stouffer and
Peter Minihane. Other participants in the solicitation may include Michael
Watters, Chief Operating Officer, and Angela Tandy, Director of Investor
Relations. The Visual Networks participants in the solicitation collectively
beneficially own 1,888,570 shares, representing approximately 7.6% of the
outstanding common stock of Visual Networks.
