Extends Sun's Network Computing Leadership to Server Appliances
PALO ALTO, Calif., Sept. 19 /PRNewswire/ -- Sun Microsystems, Inc.
(Nasdaq: SUNW) and Cobalt Networks, Inc. (Nasdaq: COBT) today announced that
they have entered into an agreement pursuant to which Sun will acquire Cobalt
in a stock-for-stock merger. Cobalt is a leading supplier of server appliance
products -- easy to use and cost effective devices that function as engines
for the delivery of network based services. This acquisition accelerates
Sun's entry into the growing server appliance marketplace and bolsters its
long-standing focus on network computing. Sun is already a leading provider
of low-end, mid-range and large-scale servers to the enterprise and service
provider marketplaces; Cobalt's products will add a server appliance offering
to that portfolio and expand Sun's offerings for service providers.
Under the terms of the merger agreement, each share of Cobalt common stock
will be converted into 0.5 Sun shares resulting in an aggregate purchase price
of approximately $2.0 billion. This acquisition will be accounted for as a
purchase and is expected to be completed during Sun's second quarter of fiscal
2001, which ends December 31, 2000. The closing of the acquisition is subject
to governmental approvals, Cobalt shareholder approval and customary closing
conditions. Sun estimates that the transaction will be accretive to earnings
before interest, taxes, depreciation and amortization, gains on the sale of
equity investments and in-process research and development charges (operating
EBITDA) for the second half of this fiscal year. Following completion of the
merger, Cobalt will become the server appliance business unit of Sun's Network
Service Provider organization, reporting to Sun Executive Vice President John
McFarlane.
"Today we're acquiring Cobalt to establish ourselves in low-end server
appliances and immediately jump into the marketplace with a proven, world
class product offering. This move is similar to our entry into the high-end
server arena, which we did through our acquisition of Starfire server
technology from Cray. Just as that product line has become one of our most
successful product lines to date, we think the demand for these high-volume,
turnkey devices will explode in the next couple of years. Cobalt is our bet
for the future," said Ed Zander, President and Chief Operating Officer, Sun
Microsystems, Inc.
"Joining with Sun is a bold strategic move for Cobalt. Sun's 10,000 person
salesforce, strong service organization, and world-class customer base is
extraordinarily powerful leverage for our business, and should enable us to
dramatically increase our sales of server appliances," said Stephen DeWitt,
President and Chief Executive Officer, Cobalt Networks, Inc. "Cobalt's
world-class products are a perfect complement to Sun's industry-leading server
offerings. Our customers will benefit through access to the full range of
Sun's engineering, sales, marketing and service resources." The above news
release contains forward looking statements that involve risks and
uncertainties. These forward looking statements include statements regarding
the proposed effect of the acquisition on Sun's earnings, Sun's ability to
accelerate expansion into the server appliance arena, Sun's expectation
regarding the success of Cobalt's products in Sun's product lines,
expectations regarding the growth of the server appliance arena and
expectations regarding demand for server appliances. Actual results may vary
materially from the results discussed in the forward-looking statements.
Factors that may cause such a difference include those risks surrounding the
closing of the acquisition, the successful integration of Cobalt into Sun's
business subsequent to the closing of the acquisition, timely development,
production and acceptance of the products and services contemplated by the
proposed acquisition, each company's ability to compete in the highly
competitive and rapidly changing marketplace and the other risks detailed from
time to time in each company's periodic reports filed with the Securities and
Exchange Commission, including, but not limited to, Sun's report on Form 10-K
for the fiscal year ended June 30, 1999, Sun's reports on Form 10-Q for its
fiscal quarters ending September 26, 1999, December 26, 1999, and
March 26, 2000.
About Cobalt Networks, Inc.
Cobalt Networks, Inc. is a developer of server appliances that enable
organizations to establish an online presence easily, cost effectively and
reliably. Cobalt's product lines -- Cobalt Qube, Cobalt Cache, Cobalt RaQ and
Cobalt NASRaQ -- are used as Internet and Web hosting server appliances at
businesses, Service Providers and educational institutions. Cobalt's
solutions are delivered through a global network of distributors, value-added
resellers and ISPs. Founded in 1996, Cobalt is headquartered in Mountain View,
California.
About Sun Microsystems, Inc.
Since its inception in 1982, a singular vision -- The Network Is The
Computer -- has propelled Sun Microsystems, Inc., to its position as a leading
provider of industrial-strength hardware, software and services that power the
Internet and allow companies worldwide to dot-com their businesses. With
$15.7 billion in annual revenues, Sun can be found in more than 170 countries
and on the World Wide Web at http://sun.com.
NOTE: Sun, Sun Microsystems , the Sun Logo, and The Network Is The
Computer are trademarks or registered trademarks of Sun, Inc. in the United
States and other countries.
Additional Information: Sun plans to file a Registration Statement on SEC
Form S-4 in connection with the merger and Cobalt expects to mail a Proxy
Statement/Prospectus to its stockholders containing information about the
merger. Investors and security holders are urged to read the Registration
Statement and the Proxy Statement/Prospectus carefully when they are
available. The Registration Statement and the Proxy Statement/Prospectus will
contain important information about Sun, Cobalt, the merger and related
matters. Investors and security holders will be able to obtain free copies of
these documents through the web site maintained by the U.S. Securities and
Exchange Commission at http//www.sec.gov. In addition to the Registration
Statement and the Proxy Statement/Prospectus, Sun and Cobalt file annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any reports,
statements and other information filed by Sun and Cobalt at the SEC public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the
Commission's other public reference rooms in New York, New York and Chicago,
Illinois. Please call the Commission at 800-SEC-0330 for further information
on public reference rooms. Sun's and Cobalt's filings with the Commission also
are available to the public from commercial document-retrieval services and at
the web site maintained by the Commission at http//www.sec.gov. Cobalt, its
directors, executive officers and certain members of management and employees
may be soliciting proxies from Cobalt stockholders in favor of the adoption of
the merger agreement. A description of any interests that Cobalt's directors
and executive officers have in the merger will be available in the Proxy
Statement/Prospectus.
SOURCE Sun Microsystems, Inc.
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Related links:
http://sun.com
CONTACT:
investors, Mark Paisley, 650-336-2238, or
mark.paisley@sun.com, or press, Elizabeth McNichols,
650-786-0368, or elizabeth.mcnichols@sun.com, or Angela Grady,
650-786-7252, or angela.grady@sun.com, all of Sun Microsystems,
Inc.
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