23.9.07

NetScout / Network General Corp.

NetScout Systems, Inc. an industry pacesetter for advanced network and service assurance solutions, announced that it has entered into a definitive agreement to acquire Network General Corporation, in a combined cash, stock, and debt transaction currently valued at approximately USD 205m. The acquisition, subject to customary closing conditions and regulatory approvals, is expected to be completed by early November. Network General employees will become NetScout employees, and the newly combined entity will be headquartered in Westford, Massachusetts. NetScout believes that for the full year of fiscal 2009 the combined company will approximately double NetScout's current revenue rate, and that the transaction will be accretive for fiscal year 2009 on a non-GAAP basis and accretive on a GAAP basis by the end of fiscal 2009. The combined company will have a larger and more diversified customer base supported by a larger sales force and a planned doubling of R&D spending. Faster revenue growth is expected to be achieved through a broader, integrated product portfolio which will provide customers greater efficiency and value. It is anticipated that there will be significant cost savings realized across the combined company, improving operating margins and earnings per share.

The acquisition furthers NetScout's vision of providing superior network-based performance management based on a KPI (key performance indicator)/Flow/Packet paradigm. The new, extended portfolio will directly benefit both customer sets by increasing the value of the NetScout solutions available to them while protecting their existing investments. NetScout customers will benefit from the addition of best-of-breed expert packet analysis and data mining, and Network General customers will benefit from best-of-breed real-time monitoring and rapid top-down troubleshooting. For all customers, this will translate into meaningful reductions in their MTTR (mean time to restore) metrics, while reducing the training and skills required to manage complex network-based operations.

The acquisition will accelerate NetScout's recently announced entry into the Wireless Service Provider segment. This segment is currently dominated by several large competitors, whose solutions have relied on deep packet analysis versus NetScout's superior real time monitoring and reporting. With the addition of Network General's leading technology, NetScout will be able to offer the best solution across a broad spectrum of performance monitoring and troubleshooting requirements.

NetScout is making the acquisition, valued at approximately USD 205m (based on the closing price of NetScout common stock on 19 September 2007), with a combination of six million shares of NetScout stock, USD 50m of cash and USD 100m of debt financing. NetScout anticipates obtaining the debt financing either from affiliates of Silver Lake and TPG or from third party financing sources. After completion of the acquisition, Silver Lake and TPG will become NetScout shareholders and representatives of Silver Lake and TPG are expected to join the NetScout Board. The transaction is slated to close in early November subject to customary closing conditions and regulatory approvals.