Acquisition Addresses Customers' Needs for Seamless Information
Access and Application Availability
Extended Ability to Leverage Expertise and Expand Channels
Mountain View, CA and Rockville, MD (ots) - Legato Systems, Inc.
("Legato") (Nasdaq: LGTO), a worldwide leader in enterprise storage
management software, and OTG Software ("OTG") (Nasdaq:OTGS), a
leading provider of data storage, data access and email management
solutions, today announced that they have signed a definitive merger
agreement under which Legato will acquire all of the outstanding
shares of OTG in a cash and stock transaction valued at approximately
$403 million or $11.13 per share based on yesterday's closing price
of Legato's common stock.
The merger agreement provides that each share of OTG common stock
will be converted into the right to receive 0.6876 of a share of
Legato common stock and $2.50 per share in cash. The closing of the
merger is subject to customary conditions, including shareholder
approval by both companies and regulatory approval of the
After the merger is completed, OTG's shareholders will own
approximately 21% of the combined entity's shares, using the treasury
stock method of accounting. The companies anticipate that the
transaction will close by the end of the second calendar quarter of
"Today's announcement represents further expansion of our core
strategy, which is to provide our customers solid information
protection, the ability to manage and maintain an application
environment and the ability to automate recovery on an application
specific basis. This acquisition allows us to accelerate our current
ability to provide our customers with the most scalable and secure
management and applications solutions available in the market today,"
said David B. Wright, chairman, president and chief executive officer
of Legato. "Our companies share a common vision about how the market
is evolving and what our customers need. OTG will give us additional
software assets and intellectual capital required to address the
growing demand among our customers for open, integrated solutions
from one source. Our aligned customer-centric culture, strategic
alliances and channel partners will enable us to offer
industry-leading solutions to our customers," Mr. Wright concluded.
"We are delighted to be joining Legato," said Richard Kay,
chairman, president and chief executive officer of OTG. "This
strategic combination will enable customers to take full advantage of
OTG's strengths in data access and business applications to
intelligently manage and retrieve information, including email, rich
media and any other form of electronic content. The complementary fit
of our highly developed third-party sales channels and vertical
partner network with Legato's well-established enterprise sales team
and strong global presence will create powerful new "go to market"
opportunities. As a result of this transaction, we believe we have
rounded out our platform to meet customers' storage and access needs
for managing the information lifecycle." Mr. Kay is expected to join
Legato's board of directors after completion of the merger.
JPMorgan H&Q, a division of J.P. Morgan Securities Inc., served as
financial advisor to Legato. Goldman, Sachs & Co. served as financial
advisor to OTG.
The executive management of Legato and OTG will hold a
teleconference today beginning at 9:00 a.m. EST to discuss the
transaction. Investors, analysts and the media are invited to join
the live teleconference by dialing (888) 946-6305. International
callers may dial (712) 271-0698. Please call at least 15 minutes
before the start time. Ask to be connected to the Legato / OTG
Legato Systems, Inc. (NASDAQ:LGTO) delivers worldwide enterprise
class software solutions and services that keep the world's
business-critical information and applications available.
With a direct sales force and through strategic partnerships and
alliances, Legato delivers the advantage of business continuance
through enterprise automation with information protection,
application availability and storage management solutions. The
company's corporate headquarters are located at 2350 West El Camino
Real, Mountain View, CA 94040. Tel: (650) 210-7000, fax: (650)
210-7032, Web site: www.legato.com. Keeping the World's
Business-Critical Information Available.
OTG Software provides next-generation data management and
collaboration solutions that virtualize storage for any type of data,
including files, messages and databases, while providing easy and
transparent access. OTG's application-oriented approach supports all
platforms with open architecture solutions that scale from the
department to the enterprise, and integrate seamlessly to store,
track and retrieve information. Headquartered in Rockville, Maryland,
the company has a customer base of over 15,000 organizations and a
global network of VARs, distributors, and OEMs. Infinite Storage.
Immediate Access.(tm) www.otg.com.
This press release contains forward-looking statements about the
proposed merger, plans for the combined businesses, competitive
positions and customers' purchases. These forward-looking statements
involve a number of risks and uncertainties that could cause Legato's
or OTG's actual results to differ materially. Factors that might
cause such a difference include, but are not limited to, the ability
to close larger contracts in the current challenging IT spending
environment, the ability to leverage relationships with channel
partners and strategic alliances, the ability to continue to develop
and update products for which there is market demand, customers'
acceptance of contract terms, unexpected fluctuations in quarterly
operating results, product concentration, competition from other
companies and rapid technological change. In addition, acquisitions
involve a number of risks, including among others, diversion of
management attention from selling and product development efforts,
losses of key personnel, unexpected transaction costs, the failure to
integrate corporate cultures and the challenges of managing a
geographically distant business. For a more detailed discussion of
these factors, and other factors that could cause actual results to
vary materially, interested parties should review the "Risk Factors"
listed in each of Legato's and OTG's Form 10-K for fiscal 2000 and
the Forms 10-Q for fiscal 2001, which are on file with the U.S.
Securities and Exchange Commission. The forward-looking statements in
this press release reflect beliefs and predictions as of February 21,
2002. Each of Legato and OTG disclaims any obligation to update these
forward-looking statements as a result of financial, business or any
other developments occurring after February 21, 2002.
The offer and sale of shares of Legato common stock in connection
with the merger will be registered with the SEC. That registration
statement on Form S-4 has not been filed as of the date of this press
release and once filed copies may be obtained from either Legato or
OTG or at the SEC's website www.sec.gov. The registration statement
will contain important information as to how the merger will affect
investments in shares of either Legato or OTG and interested persons
should carefully read that registration statement in its entirety.
Legato, OTG and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from
the security holders of Legato and OTG in favor of the merger
agreement. The directors and executive officers of Legato and their
beneficial ownership of Legato common stock are set forth in the most
recent proxy statement filed by Legato with the SEC. The directors
and executive officers of OTG and their beneficial ownership of OTG
common stock are set forth in the most recent proxy statement filed
by OTG with the SEC. You may obtain those proxy statements free of
charge at the SEC's website, www.sec.gov. Security holders of Legato
and OTG may obtain additional information regarding the interests of
the foregoing people by reading the registration statement when it
ots Originaltext: Legato Systems Schweiz GmbH
Contacts for Legato
Douglas W. Gruehl
Contacts for OTG