NETIQ CORP
425, 2000-03-02
PREPACKAGED SOFTWARE
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                                                      Filed by NetIQ Corporation
                           Pursuant to Rule 425 Under the Securities Act of 1933
                                        And Deemed Filed Pursuant to Rule 14a-12
                                                  Under the Exchange Act of 1934

                               Subject Company:  Mission Critical Software, Inc.
                                                   Commission File No. 000-26205

Article appearing in Raleigh (NC) News & Observer February 29, 2000; circulated
among NetIQ employees on Wednesday, March 01, 2000 10:57 PM


Houston firm buys Ganymede, then is bought itself

     The Morrisville company brings a record price for a private, local software
business.
By DAVID RANII, Staff Writer

     MORRISVILLE -- Ganymede Software is being acquired for $171.2 million worth
of stock as part of a three-way deal that will create a new publicly held
software company with big aspirations.

     The pending deal for 5-year-old Ganymede shatters the record for the
highest price paid for a privately owned Triangle software business. The record
had been held by Accipiter, which agreed two years ago to be acquired for CMGI
stock valued at $35 million, although the value of that stock rose exponentially
after the deal was announced.

     Ganymede is being acquired by Mission Critical Software of Houston, which
in turn is being purchased by rival NetIQ of Santa Clara, Calif., for $1.3
billion in stock. The combined companies, which will operate under a name that
hasn't been chosen yet, will have 375 employees and posted revenue totaling $63
million last year.

     Ganymede's contribution to the mix is 80 employees and $10 million in
revenue in 1999, up from about $7 million in 1998. Ganymede received national
recognition last year from PC Week magazine, which named it to its list of 15
companies to watch in 1999.

     "This is really three different teams coming together to do something
pretty special," said Tim Huntley, Ganymede's president and co-founder. "You
have three legs of a stool that are building blocks for an absolutely [terrific]
company."

     Ganymede sells software that helps companies monitor and manage their
computer networks. NetIQ helps large companies manage their applications
software powered by Microsoft's Windows NT and 2000 operating systems, while
Mission Critical manages Windows NT and 2000 servers. "We'll be able to walk
into customers' offices and offer a broad suite of products," Huntley said.
Although details are still being worked out, Huntley said he was
anticipating nothing more than
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nominal -- if any -- job cutbacks at Ganymede's operations in Morrisville as a
result of the sale. "The expectation is that the operation here will be run
exactly as it has been," Huntley said. Huntley said he will be general manager
of what will become a division of the combined company. The division hasn't been
named, but it probably won't be called Ganymede, he said.

     The Morrisville company's three other co-founders -- Steve Joyce, John Q.
Walker II and Peter Schwaller -- all will remain with the business. All are
former IBMers who worked in Big Blue's RTP operations before leaving to create
Ganymede in 1995.

     Both deals -- the NetIQ-Mission Critical merger and Mission Critical's
acquisition of Ganymede -- were announced Monday, and both are pending. The
Ganymede announcement was based on a letter of intent signed by Ganymede and
Mission Critical.

     The Ganymede acquisition is separate from the merger and would proceed even
if the merger is somehow derailed, Huntley said. The merger of NetIQ and Mission
Critical is expected to completed by the end of June, but the Ganymede sale
might be finalized sooner. Ganymede started talking to Mission Critical about
four weeks ago and, two weeks into the discussions, was informed that a merger
with NetIQ was in the works. Huntley said the acquisition talks were "very
compelling" up to that point, but the prospect of the merger was "a huge plus."

     Huntley declined to say how much stock he and his co-founders will receive
in the sale, and said he didn't know how many millionaires would emerge from the
ranks of Ganymede's employees. All of Ganymede's employees own shares in the
business and therefore will benefit from the sale. The sale makes Ganymede part
of a "high-flying publicly held company" without assuming any of the risks
associated with taking a company public, Huntley said. NetIQ's stock has jumped
more than five-fold since it went public in July, while Mission Critical's
shares have more than tripled since August, when it launched an initial public
offering of common stock.

     NetIQ stock fell $5.50 to $68 Monday. Mission Critical closed at $61.656,
down 59.4 cents. Ganymede is being sold for 2.75 million shares and stock
options in Mission Critical, which was valued at $171.2 million when the deal
was announced.

     Ganymede's growth was fueled by about $10 million in venture capital, which
included money invested by the TriState Investment Group, a Triangle-based
conglomeration of wealthy individuals.

     Jim Newton, executive director, said the deal would make Ganymede TIG's
second-best investment ever -- after its investment in Accipiter. Accipiter
eventually netted the group CMGI stock worth 60 times the original investment,
which was then distributed to members to hold or sell as they saw fit.

     Ed Whitehorne, a TIG member who is the liaison between the group and
Ganymede, said he was enthusiastic about the pending sale and merger. "I do
believe very strongly that the combination

                                      -2-
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of these two companies, with Ganymede, synergistically is a very good fit," he
said.


     Bloomberg News contributed to this story.

                                      ***

     This article does not constitute an offer of any securities for sale.

     With the exception of the historical data contained herein, this transcript
contains statements relating to future results of the companies that are
``forward looking statements'' as defined in the Private Securities Litigation
Reform Act of 1995. The companies' actual future results could differ materially
from the results discussed herein. Factors that could cause or contribute to
such differences include the risks inherent in acquisitions of technology
businesses including the failure of the transactions to close due to regulatory
obstacles or other factors, the successful integration of the companies, the
timing and successful completion of technology and product development, our
ability to retain and hire key executives, technical personnel and other
employees, changing relationships with customers, suppliers and strategic
partners, unanticipated costs associated with integration activities, as well as
customer acceptance of new product offerings, and competition in the companies'
various product lines. For a more complete discussion of risks and uncertainties
see the section entitled ``Risk Factors'' in NetIQ's and Mission Critical
Software's reports on form 10-Q as filed with the Securities and Exchange
Commission.

     NetIQ Corporation, its officers and directors may be deemed to be
participants in the solicitation of proxies from NetIQ's shareholders with
respect to the transactions contemplated by the merger agreement. Information
regarding such officers and directors is included in NetIQ's S-1 Registration
Statement filed with the SEC on November 15, 1999, and subsequently amended.
This document is available free of charge at the SEC website at www.sec.gov and
from the NetIQ Corporation contact listed below.

     Mission Critical Software, Inc., its officers and directors may be deemed
to be participants in the solicitation of proxies from Mission Critical
shareholders with respect to the transactions contemplated by the merger
agreement. Information regarding such officers and directors is included in
Mission Critical's S-1 Registration Statement filed with the SEC on October 25,
1999, and subsequently amended. This document is available free of charge at the
SEC website at www.sec.gov and from the Mission Critical contact listed below.

     SHAREHOLDERS OF MISSION CRITICAL AND OTHER INVESTORS ARE URGED TO READ THE
PROXY STATEMENT-PROSPECTUS WHICH WILL BE INCLUDED IN THE REGISTRATION STATEMENT
ON FORM S-4 TO BE FILED BY NETIQ CORPORATION, INC. IN CONNECTION WITH THE MERGER
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. AFTER SUCH DOCUMENT IS FILED, IT
WILL BE AVAILABLE FREE OF CHARGE ON THE SEC WEBSITE AT WWW.SEC.GOV AND FROM
NETIQ CORPORATION AND MISSION CRITICAL SOFTWARE THROUGH THE CONTACTS LISTED
BELOW.

                                      -3-
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Contacts:
For Mission Critical Software:

Susan Torrey, Press & Investor Relations, 713.548.1863,
mailto:[email protected]
- ---------------------------------------
Steve Odom, Chief Financial Officer, (713) 548-1829,
mailto:[email protected]
- ------ ------------------------------

For NetIQ:
Debra Randall, Investor Relations, 408-330-7116, mailto:[email protected]
                                                 ------------------------------
Laurie Chun, Public Relations, 408-330-7113, mailto:[email protected]
                                             ----------------------------
Jim Barth, Chief Financial Officer, 408-354-3956, mailto:[email protected]
                                                  --------------------------

For Ganymede:
Katherine Demacopoulos, Public Relations, 919-469-0997 x325,
mailto:[email protected]
- ------------------------------

                                      -4-



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