Software maker LANDesk Group Ltd. announced Thursday it has signed an agreement to be acquired by Alabama-based Avocent Corp., a maker of equipment for computer networks, for $416 million.
The deal provides privately held LANDesk, which is based in South Jordan and is a spin-off of Intel Corp., with $200 million in cash, $200 million in stock and $16 million in assumed options. The transaction value may be increased by up to $60 million if LANDesk meets certain financial targets. The deal is expected to close within 75 days.
Joe Wang, president and chief executive officer of LANDesk, said the acquisition will not affect the company's 500 employees, including about 300 based in Utah.
"We're fully expected to operate the same way as we have been," Wang said. "We want to continue to grow our business and continue to lead the market. I do not expect any changes in other offices worldwide."
John R. Cooper, chairman and chief executive of Avocent, based in Huntsville, Ala., said in the immediate term Wang will continue in his role as CEO of LANDesk. The two executives said they are still negotiating a long-term role for Wang.
News of the acquisition sent Avocent's stock tumbling $2.85, or 9 percent, to close Thursday at $28.76 per share on Nasdaq.
"I'm sure that there are people who will feel we paid too much, and I'm sure Joe is sitting here feeling we didn't pay enough," Cooper said. "I can assure you that we have had a fully negotiated exchange. In that context, I'm absolutely sure it's a fair price."
While the price of its stock fell, Avocent offered some good news for investors Thursday, reporting that its net income for the first quarter increased to $12.9 million, or 26 cents per diluted share, compared with net income of $1.8 million, or 4 cents per diluted share, in the first quarter of 2005. Net sales for the first quarter increased 23.1 percent to $94.5 million, compared with $76.8 million in the first quarter of 2005.
"I would hope that by virtue of combining the two companies and combining our sales channels and customer relationships that we are able to expand both," Cooper said. "It is our fervent hope that LANDesk will expand. That's in all of our interest that that occur."
Wang said other suitors were interested in buying LANDesk, but he would not give details.
"It's an opportunity that I just cannot pass. We believe that Avocent is the best fit," Wang said. "Avocent is very strong in delivering hardware management technologies, and we're very strong in delivering software management technologies, and therefore the combined two will become a unique force in the market. This transaction, I believe, is very good for our employees, our customers, our partners and our investors. It's a good return for the investors."
Cooper said Avocent had been in negotiations with LANDesk since last August.
"It's a transaction that we sought. Joe did not chase us. We chased him for a long period of time," Cooper said. "Our interest was that it brought great technology into Avocent. It's in a place that we're comfortable with and a culture that we believe that will blend well with ours. We see the Salt Lake location as being favorable from that standpoint."
Wang, a tech executive for two decades, felt in 2002 that Intel's LANDesk software division was undervalued by the company. Using his own money, plus capital raised from investors, Wang put in a bid for the division, partnering with another group also interested in acquiring the company.
LANDesk makes management software for information technology assets that include laptops, desktops, servers and hand-held devices.
E-mail: danderton@desnews.com