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Filed by Sun Microsystems, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
Subject Company: Cobalt Networks, Inc.
Commission File No.: 0-24360
SUN MICROSYSTEMS, INC. PRESS RELEASE
September 19, 2000
SUN MICROSYSTEMS ACQUIRES COBALT NETWORKS
Extends Sun's Network Computing Leadership to Server Appliances
PALO ALTO, Calif -- September 19, 2000 -- Sun Microsystems, Inc. (NASDAQ: SUNW)
and Cobalt Networks, Inc. (NASDAQ: COBT) today announced that they have entered
into an agreement pursuant to which Sun will acquire Cobalt in a stock-for-stock
merger. Cobalt is a leading supplier of server appliance products - easy to use
and cost effective devices that function as engines for the delivery of network
based services. This acquisition accelerates Sun's entry into the growing server
appliance marketplace and bolsters its long-standing focus on network computing.
Sun is already a leading provider of low-end, mid-range and large-scale servers
to the enterprise and service provider marketplaces; Cobalt's products will add
a server appliance offering to that portfolio and expand Sun's offerings for
service providers.
Under the terms of the merger agreement, each share of Cobalt common stock will
be converted into 0.5 Sun shares resulting in an aggregate purchase price of
approximately $2.0 billion. This acquisition will be accounted for as a purchase
and is expected to be completed during Sun's second quarter of fiscal 2001,
which ends December 31, 2000. The closing of the acquisition is subject to
governmental approvals, Cobalt shareholder approval and customary closing
conditions. Sun estimates that the transaction will be accretive to earnings
before interest, taxes, depreciation and amortization, gains on the sale of
equity investments and in-process research and development charges (operating
EBITDA) for the second half of this fiscal year. Following completion of the
merger, Cobalt will become the server appliance business unit of Sun's Network
Service Provider organization, reporting to Sun Executive Vice President John
McFarlane.
"Today we're acquiring Cobalt to establish ourselves in low-end server
appliances and immediately jump into the marketplace with a proven, world class
product offering. This move is similar to our entry into the high-end server
arena, which we did through our acquisition of Starfire server technology from
Cray. Just as that product line has become one of our most successful product
lines to date, we think the demand for these high-volume, turnkey devices will
explode in the next couple of years. Cobalt is our bet for the future," said Ed
Zander, President and Chief Operating Officer, Sun Microsystems, Inc.
"Joining with Sun is a bold strategic move for Cobalt. Sun's 10,000 person
salesforce, strong service organization, and world-class customer base is
extraordinarily powerful leverage for our business, and should enable us to
dramatically increase our sales of server appliances," said Stephen DeWitt,
President and Chief Executive Officer, Cobalt Networks, Inc. "Cobalt's
world-class products are a perfect complement to Sun's industry-leading server
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offerings. Our customers will benefit through access to the full range of Sun's
engineering, sales, marketing and service resources."
The above news release contains forward looking statements that involve risks
and uncertainties. These forward looking statements include statements regarding
the proposed effect of the acquisition on Sun's earnings, Sun's ability to
accelerate expansion into the server appliance arena, Sun's expectation
regarding the success of Cobalt's products in Sun's product lines, expectations
regarding the growth of the server appliance arena and expectations regarding
demand for server appliances. Actual results may vary materially from the
results discussed in the forward-looking statements. Factors that may cause such
a difference include those risks surrounding the closing of the acquisition, the
successful integration of Cobalt into Sun's business subsequent to the closing
of the acquisition, timely development, production and acceptance of the
products and services contemplated by the proposed acquisition, each company's
ability to compete in the highly competitive and rapidly changing marketplace
and the other risks detailed from time to time in each company's periodic
reports filed with the Securities and Exchange Commission, including, but not
limited to, Sun's report on Form 10-K for the fiscal year ended June 30, 1999,
Sun's reports on Form 10-Q for its fiscal quarters ending September 26, 1999,
December 26, 1999, and March 26, 2000.
About Cobalt Networks, Inc.
Cobalt Networks, Inc. is a developer of server appliances that enable
organizations to establish an online presence easily, cost effectively and
reliably. Cobalt's product lines - Cobalt Qube, Cobalt Cache, Cobalt RaQ and
Cobalt NASRaQ - are used as Internet and Web hosting server appliances at
businesses, Service Providers and educational institutions. Cobalt's solutions
are delivered through a global network of distributors, value-added resellers
and ISPs. Founded in 1996, Cobalt is headquartered in Mountain View, California.
About Sun Microsystems, Inc.
Since its inception in 1982, a singular vision -- The Network Is The
Computer -- has propelled Sun Microsystems, Inc. (Nasdaq: SUNW), to its position
as a leading provider of industrial-strength hardware, software and services
that power the Internet and allow companies worldwide to dot-com their
businesses. With $15.7 billion in annual revenues, Sun can be found in more than
170 countries and on the World Wide Web at http://Sun.com.
# # #
Sun, Sun Microsystems, the Sun Logo, and The Network Is The Computer are
trademarks or registered trademarks of Sun Microsystems, Inc. in the United
States and other countries.
Additional Information: Sun plans to file a Registration Statement on SEC Form
S-4 in connection with the merger and Cobalt expects to mail a Proxy
Statement/Prospectus to its stockholders containing information about the
merger. Investors and security holders are urged to read the Registration
Statement and the Proxy Statement/Prospectus carefully when they are available.
The Registration Statement and the Proxy Statement/Prospectus will contain
important information about Sun, Cobalt, the merger and related matters.
Investors and security holders will be able to obtain free copies of these
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documents through the web site maintained by the U.S. Securities and Exchange
Commission at http//www.sec.gov. In addition to the Registration Statement and
the Proxy Statement/Prospectus, Sun and Cobalt file annual, quarterly and
special reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy any reports, statements and other
information filed by Sun and Cobalt at the SEC public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at the Commission's other public
reference rooms in New York, New York and Chicago, Illinois. Please call the
Commission at 800-SEC-0330 for further information on public reference rooms.
Sun's and Cobalt's filings with the Commission are also available to the public
from commercial document-retrieval services and the web site maintained by the
Commission at http://www.sec.gov. Cobalt, its directors, executive officers and
certain members of management and employees may be soliciting proxies from
Cobalt stockholders in favor of the adoption of the merger agreement. A
description of any interests that Cobalt's directors and executive officers have
in the merger will be available in the Proxy Statement/Prospectus.
