CGFW Cyberguard Corp (MM)

Secure Computing Corporation (NASDAQ:SCUR), the experts in securing connections between people, applications and networks(TM), today announced it has completed its merger with CyberGuard Corporation (NASDAQ:CGFW), a global provider of security solutions that protect the critical components of the largest and most complex information networks for Global 2000 enterprises and government organizations. The merger creates a new leading IT security provider, which has a combined customer base of over 17,000 customers and 1,300 resellers worldwide, with distribution channels extending across more than 100 countries. "We believe that CyberGuard is a perfect fit for Secure Computing, as it accelerates the company's strategic vision and better positions us in the two fastest growing segments of the security industry," said John McNulty, chairman, president, and CEO of Secure Computing. "By combining the two companies, Secure Computing is the new market leader in the Unified Threat Management (UTM) market, the fastest growing segment of the IT security market according to IDC. This merger also accelerates our position in the Secure Content Management (SCM) market, and clearly positions Secure Computing as the number two player in web filtering with approximately 21 million licensed seats." McNulty continued, "Going forward, we will leverage our complementary technologies and channel partnerships, and gain additional important competitive advantages in the market." On January 11, 2006, Secure Computing stockholders approved the issuance of shares of Secure Computing common stock to the holders of shares of CyberGuard common stock in connection with the merger at Secure Computing's special meeting of stockholders. Also on January 11, 2006, CyberGuard stockholders voted to approve the merger agreement and the merger between the two companies. Effective immediately, CyberGuard will become integrated into Secure Computing and the CyberGuard ticker symbol, CGFW, will be removed from the NASDAQ listing before tomorrow's opening of market. In connection with the merger, Richard L. Scott, a member of CyberGuard's board of directors, and Cary J. Davis, a Warburg Pincus managing director, are being added to Secure Computing's Board of Directors. At its special meeting, Secure Computing stockholders also approved two additional proposals: (i) the issuance of shares of Secure Computing Series A preferred stock and a warrant to purchase shares of Secure Computing common stock to Warbug Pincus Private Equity IX, L.P. and (ii) amendments to the Secure Computing amended and restated 2002 Stock Option Plan to increase the number of plan shares by 1,500,000, among other changes. In connection with this transaction, Warburg Pincus, the global private equity firm and a leading investor in technology companies, will invest $70 million in Secure Computing in the form of convertible preferred stock with warrants. The preferred stock will be convertible at $13.51 per share, representing an 11 percent premium to the closing price of Secure Computing's common shares on August 17, 2005, and will include a 5 percent dividend which shall be paid-in-kind for the first 4.5 years and thereafter may be paid in cash, at the option of Secure Computing. Warburg Pincus will also receive 1.0 million warrants to purchase Secure Computing common stock at a price of $14.74, representing a premium of 21 percent to the closing price of Secure Computing's common shares on August 17, 2005. The convertible preferred stock is not redeemable but may be converted to common at any time by Warburg Pincus and after one year by Secure Computing subject to the achievement of certain share price performance milestones. This investment will close concurrent with, and is contingent upon, the closing of the CyberGuard transaction. Conference Call Secure Computing will hold a conference call on Thursday, February 2, 2006, at 4:30 p.m. EST/1:30 p.m. PST, at which time Secure Computing executives will discuss the merger and provide 2006 financial guidance, along with its full financial results for the fourth quarter of 2005. If you would like to participate in the conference call, please dial-in five minutes prior the start time at: -0- *T North America: 888-791-1856 International: 210-234-0004 Leader: Jane Underwood Passcode: SCUR *T This call is being web cast by Thomson/CCBN and can be accessed at the Investor Relations section of the Secure Computing web site at: www.securecomputing.com. A rebroadcast of the call will be available at the Investor Relations section of the Secure Computing web site. In addition, a telephone replay will be made available through February 9th by accessing, 800-873-2068 for North America or 402-220-5051 for international. About Secure Computing Secure Computing (NASDAQ:SCUR) has been securing the connections between people and information for over 20 years. Specializing in delivering solutions that secure these connections, Secure Computing is uniquely qualified to be the global security solutions provider to organizations of all sizes. Our more than 14,000 global customers, supported by a worldwide network of partners, include the majority of the Dow Jones Global 50 Titans and the most prominent organizations in banking, financial services, healthcare, telecommunications, manufacturing, public utilities, education, and federal and local governments. The company is headquartered in San Jose, Calif., and has sales offices worldwide. For more information, see http://www.securecomputing.com. Forward Looking Statements The statements contained in this release, which are not historical facts, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Examples of such forward-looking statements include Secure Computing's belief that CyberGuard is an excellent fit with Secure Computing, the acquisition of CyberGuard will strengthen Secure Computing's current activities, and that the merger will add a base of new customers, expand the scope of Secure Computing's product line and be accretive to Secure Computing's earnings within the second full quarter of operations following the close of the transaction. These statements are subject to uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include, among others, the following risks: that customers and partners will not react favorably to the merger, risks associated with acquiring other companies, including integration risks, and other risks described in Secure Computing's and CyberGuard's Securities and Exchange Commission filings, including the Registration Statement on Form S-4 filed with the SEC in connection with the transaction, Secure's Annual Report on Form 10-K, as amended, for the year ended December 31, 2004 and its Quarterly Report on Form 10-Q, as amended, for the quarter ended September 30, 2005, under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and CyberGuard's Annual Report on Form 10-K, as amended, for the year ended June 30, 2004, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Neither Secure nor CyberGuard undertake any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release.