Neoware to Acquire Maxspeed Corporation
Acquisition Marks Neoware's Entry Into Asian Market
KING OF PRUSSIA, Pa. and PALO ALTO, Calif., Oct. 26, 2005 (PRIMEZONE)
-- Neoware Systems Inc. (Nasdaq:NWRE) today announced that it has
signed a definitive agreement to acquire privately held Maxspeed
Corporation, a leading provider of customized thin client solutions.
With headquarters in Palo Alto, CA, and research, development and sales
subsidiaries in Beijing and Shanghai, China, Maxspeed provides Neoware
with an immediate presence in Asia. The acquisition furthers Neoware's
strategy of developing or acquiring distribution channels and
engineering centers in major markets around the world in order to
provide customized thin client software solutions to large global
enterprises, as well as small and medium sized business customers.
"This acquisition further expands our industry share and opens
important markets for us in China and Asia," explained Michael
Kantrowitz, chairman and chief executive officer of Neoware. "Maxspeed
customers will continue to have access to the highly skilled
engineering and development expertise that they are accustomed to,
along with Neoware's financial resources and deep customer-focus.
Neoware has the scale and scope to meet the ongoing long term thin
client computing needs of Maxspeed customers."
Acquiring Maxspeed further enhances Neoware's position as a global
leader in thin clients while strengthening its engineering capabilities
in Asia. As a result of this and other acquisitions completed and
partnerships entered into over the past year, Neoware now has
engineering resources in China, the US, the UK, France, Austria and
India, providing Neoware with one of the largest worldwide development
organizations in the thin client business. Maxspeed brings Neoware new
competencies in software and customizations that enhance the Company's
ability to act globally and deliver locally. Wei Ching, Maxspeed's
President and CEO, will join Neoware as Executive Vice President
responsible for Asia Pacific operations.
"Neoware is a leader in the thin client market, and with our
complementary skills, we believe that we can further accelerate the
Company's growth," said Wei Ching, president and CEO of Maxspeed. "We
anticipate that our geographic presence in China will bring Neoware
significant new opportunities, expertise and revenue streams, and
brings enhanced solutions to our worldwide customers."
According to IDC, the thin client segment of the enterprise PC market
is experiencing robust growth, and is projected to grow at a compound
annual rate of 20.7% from 2005 to 2009. Thin clients cost less than
traditional personal computers because they have no hard drive or other
local media, relying instead on storage and applications located on
secure, managed servers. Thin client computing solves significant
problems faced by global enterprises by enhancing security,
manageability and reliability of desktops, making them virtually immune
from standard PC viruses, allowing them to be centrally managed and
configured, and enabling them to be locked down, eliminating users'
need to configure their desktops. The result is significantly lower
up-front and total cost of ownership compared to traditional PC
alternatives.
Terms of the Agreement
Under the terms of the agreement, Neoware will acquire Maxspeed for a
purchase price of $24 million in cash which includes a holdback of $1.4
million to fund restructuring costs. The upfront cash payment is
subject to adjustment based upon Maxspeed's cash and net working
capital at closing. Maxspeed is required to provide a minimum of $9
million of cash and $3.7 million of net working capital excluding cash
as of closing, with deficiencies resulting in dollar-for-dollar
downward adjustments in the purchase price if the defined minimums are
not met. In addition to the upfront consideration, the Maxspeed common
shareholders will be eligible to receive a potential earnout of up to a
total of $4 million, based upon performance. The transaction is
expected to result in approximately $1.5 to $2.0 million of
restructuring charges to be recorded by Neoware in its December 2005
quarter which will be partially funded by the $1.4 million cash hold
back. The acquisition is expected to close before December 31, 2005.
Neoware will address questions about this transaction as part of its
first quarter earnings release on November 2, 2005.
About Neoware
Neoware (Nasdaq:NWRE) is the leading provider of enterprise software,
thin client appliances, and related services that make computing more
open, secure, reliable, affordable and manageable. By employing open
technologies and eliminating the obsolescence built into standard
personal computer architectures, Neoware helps enterprises leverage
server-based computing architectures to increase security and
reliability, enhance flexibility, as well as lower their total cost of
ownership.
Neoware's software products enable enterprises to gain control of their
desktops, stream software on-demand, and to integrate mainframe,
midrange, UNIX and Linux applications with Windows(R) environments and
the Web. Its thin client appliances and software enable enterprises to
run applications on servers and display them across wired or wireless
networks on secure, managed, reliable appliances that cost as little as
one-fourth the price of today's typical business personal computer. The
company's global development, services, and support provide customers
with customized solutions that facilitate their specialized computing
needs.
Neoware's products are available worldwide from IBM, as well as from
select, knowledgeable resellers. More information about Neoware can be
found on the Web at http://www.neoware.com or via email at
info@neoware.com. Neoware's global headquarters is in King of Prussia,
PA.
About Maxspeed
Maxspeed Corp., the thin client customization experts, manufactures
custom hardware and embedded software solutions that replace legacy
green-screens, desktop PCs and mobile PC notebooks. Maxspeed thin
clients offer unparalleled benefits such as significant total cost of
ownership (TCO) savings, extensive customer-specific customizations,
rugged design, low maintenance, superior data security and rapid,
system-wide deployment. Maxspeed's powerful, enterprise-class remote
management software, MMS, provides a simplified and secure management
system. Maxspeed thin clients integrate into virtually all operating
environments including Citrix, Windows, SCO-Unix and Linux.
Neoware is a registered trademark of Neoware Systems Inc. All other
names products and services are trademarks or registered trademarks of
their respective holders.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding: the consummation of the merger with
Maxspeed; our strategy of developing or acquiring distribution channels
and engineering centers in major markets; our anticipated strengthened
engineering capabilities in Asia; new competencies in software and
customizations; acceleration of our growth; the opening of important
markets in China and Asia; anticipated opportunities, expertise and
revenue streams for us, and enhanced solutions for our customers as a
result of the merger; the projected growth of the thin client segment;
and the addition of new employees, including Wei Ching. These
forward-looking statements involve risks and uncertainties. Factors
that could cause our actual results to differ materially from those
predicted in such forward-looking statements include: our ability to
consummate the merger and successfully integrate the Maxspeed's
business; the ability to retain Maxspeed's existing customers; the
timing and receipt of future orders; our timely development and
customers' acceptance of our products, including the former Maxspeed
products; our ability to meet the long-term needs of Maxspeed's
customers; our ability to successfully penetrate the Asia market;
pricing pressures; rapid technological changes in the industry; growth
of overall thin client sales through the capture of a greater portion
of the PC market, including sales to large enterprise customers; our
dependence on our suppliers; our continued ability to sell our products
through IBM and Lenovo to their customers; increased competition; our
ability to attract and retain qualified personnel, including Maxspeed's
sales, engineering and other employees, as well as employees of other
businesses we have acquired; the economic viability of our suppliers
and channel partners; adverse changes in customer order patterns; our
ability to identify future acquisitions and to successfully consummate
and integrate recently completed and future acquisitions; adverse
changes in general economic conditions in the U.S. and internationally;
risks associated with foreign operations; and political and economic
uncertainties associated with current world events. These and other
risks are detailed from time to time in Neoware's periodic reports
filed with the Securities and Exchange Commission, including, but not
limited to, its report on Form 10-K for the year ended June 30, 2005.
CONTACT:
Press contact: Company contact:
Cameron Associates Neoware Systems Inc.
Kevin McGrath Keith Schneck, Chief Financial
(212) 245-8000, ext. 203 Officer
E-mail: kevin@cameronassoc.com (610) 277-8300, ext. 1072
E-mail: kschneck@neoware.com