Cisco buys WheelGroup for network security
WheelGroup's intrusion detection and security scanning software to expand Cisco's security app offerings
New York (February 19, 1998) -- Cisco Systems Inc. today announced it has signed a definitive agreement to acquire privately held security-software company WheelGroup Corp. in a stock exchange deal valued at about $124 million.
Cisco in a statement today said that it expects the WheelGroup's software technology to strengthen its ability to offer network security applications and help create a more secure environment for its customers to do business on the Internet.
The deal calls for between 1.8 million and 2.0 million shares of Cisco common stock to be exchanged for the outstanding shares and options of WheelGroup. Based upon Cisco's Feb. 18 closing price of $65.50 per share, the stock exchanged would have a value of approximately $124 million, according to Cisco.
Cisco's stock moved up 1/8, to 65-5/8, in morning trading after the acquisition announcement was released today.
Cisco said it expects to incur a one-time charge against after-tax earnings of between 8 cents and 13 cents per share in the third quarter of fiscal 1998, for expenses stemming from the acquisition of WheelGroup's in-process research and development. The third quarter ends in April.
The acquisition has been approved by the board of directors of each company and is expected to be completed by the middle of March, and is subject to various closing conditions.
WheelGroup develops intrusion detection and security scanning software. Its technology operates with network routers and switches, and is designed to provide real-time detection to respond to unauthorized intrusions and hackers, according to Cisco.
--Marc Ferranti, IDG News Service
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