December 10, 2002

NetIQ to Acquire Marshal Software

Combination Extends NetIQ's Systems and Security Management Market Leadership; Addresses Critical Management and Content Security Issues for Messaging Administrators


Press Release

SAN JOSE, CA

NetIQ Corp. (NASDAQ: NTIQ), a leading provider of Systems Management, Security Management and Web Analytics solutions, today announced that it has agreed to acquire Marshal Software Ltd. Marshal Software, a privately held company based in Auckland, New Zealand, is a recognized leader in the anti-spam and enterprise content security market. This acquisition helps NetIQ address a leading problem faced by e-mail administrators today—the controlling of spam and the monitoring of electronic data entering and leaving the organization—and adds content security to NetIQ's comprehensive range of migration, security administration and performance management solutions for messaging environments.

Under the terms of the agreement, NetIQ will pay approximately $23 million in cash to Marshal Software stockholders. There will be no material effect on revenues or income for the current quarter, with the exception of one-time charges relating to the acquisition that will occur in the second and third quarter of NetIQ's 2003 fiscal year. Beginning in the third fiscal quarter of 2003, NetIQ expects to add revenues of approximately $2 million per quarter from the Marshal Software products. Beginning in the fourth fiscal quarter, the transaction is expected to be modestly accretive to earnings. The acquisition of Marshal Software is expected to complete by Dec. 31, 2002.

"Marshal Software delivers a comprehensive set of content security solutions for both e-mail and Web environments, as shown by the numerous industry awards Marshal has garnered and their more than 3,500 customers," said Tom Kemp, senior vice president at NetIQ. "With the addition of Marshal's content security solution we believe our leadership in delivering the industry's broadest and deepest set of management products for messaging and Web environments will be further enhanced."

According to market research firm Meta Group, 40 percent of the inbound e-mail traffic at some organizations can be classified as spam. This rapid growth of spam has become one of the biggest headaches for e-mail administrators, with spam causing significant loss of employee productivity as well as impacting key network resources that in turn can significantly impact system and application performance.

In addition, other content security issues, such as protecting confidential information, blocking e-mail-based viruses and the enforcement of e-mail usage policies have also become increasingly critical issues that administrators must now address. According to market research firm IDC, the e-mail content security market is growing rapidly, with a market size estimated at $184 million in 2002, and is expected to grow at a 37 percent compound annual growth rate through 2006.

"We believe the Marshal products will greatly appeal to both our systems and security management customers. In the Systems Management market, NetIQ estimates that our customers use NetIQ™ products to manage more than 10 million Exchange mailboxes, which represents more than 10 percent of the Exchange server market. In the Security Management market, NetIQ announced yesterday that its acquisition of PentaSafe Security Technologies, Inc. was complete. PentaSafe's VigilEnt™ policy management solutions complement the e-mail and Web usage policy enforcement capabilities that the Marshal products provide," added Kemp.

"We are extremely excited to be matching Marshal Software's award-winning content security products with NetIQ's enterprise sales and marketing expertise," said John Skeates, general manager at Marshal Software. "On the strength of our products, Marshal Software has been effectively grabbing market share and delivering the solutions our customers demand. The combination of NetIQ and Marshal Software represents a compelling solution for customers."

The acquisition is expected to provide the following benefits:

  • Extends NetIQ's Systems and Security Management market leadership into the large and growing anti-spam and enterprise content security market;
  • Expands NetIQ's current product offerings to fill a critical point of pain that is being experienced by NetIQ's security and systems management customers that manage an estimated 10 million Exchange mailboxes;
  • Marshal Software is a profitable company and is expected to add $8 million in revenue for calendar year 2003; and
  • Marshal Software brings great technology in the anti-spam and content security market as evidenced by the numerous industry awards they have won.

Following the completion of the acquisition, NetIQ will retain Marshal Software's office in New Zealand with development and operational personnel, and Marshal's worldwide sales and partner network will be integrated into NetIQ's sales and channel organization.

About Marshal Software

Marshal Software, a leading provider of Internet Content Security solutions, has been pioneering new products for e-mail scanning and Web filtering since 1997. Marshal Software's suite of products provides control, monitoring, management and content security for electronic business communications. Sold in more than 30 countries worldwide, MailMarshal and WebMarshal are used by more than 3,500 customers serving millions of users around the globe.

Marshal Software products help protect against threats to network and information security, workplace liability issues, unnecessary bandwidth consumption and worker non-productivity associated with uncontrolled use of the Internet. Offices are located in Atlanta, USA; London, England; Sydney, Australia; and Auckland, New Zealand. For more information, please visit Marshal Software's Web site at www.marshalsoftware.com.

About NetIQ

Founded in 1995, NetIQ Corp. (NASDAQ: NTIQ) is a leading provider of Systems Management, Security Management and Web Analytics solutions. Historically focused on the Windows management market, NetIQ now delivers cross-platform solutions that enhance business performance resulting in higher returns on infrastructure and Web investments.

NetIQ products are sold across all continents directly and through a network of authorized NetIQ partners and resellers. The company is headquartered in San Jose, Calif., with development and operational personnel in Houston, Texas, Raleigh, N.C., Bellevue, Wash., and Portland, Ore. For more information, please visit NetIQ's Web site at www.netiq.com or call (888) 323-6768.

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Amy Sachrison
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