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Underscoring the convergence of security and storage software technology, Symantec Corp. and Veritas Software Corp. confirmed rumors when they announced Thursday that Symantec had agreed to acquire Veritas in a stock transaction worth about $13.5 billion. Under the agreement, which has been unanimously approved by both boards of directors, Veritas’ stock would be converted into Symantec stock at a fixed exchange ratio of 1.1242 shares of Symantec common stock for each outstanding share of Veritas common stock. Upon closing, Symantec shareholders would own about 60 percent and Veritas shareholders about 40 percent of the combined company. The transaction is expected to be tax-free to shareholders of both companies for U.S. federal income tax purposes. Lehman Brothers is Symantec’s financial adviser, while Fenwick & West is its outside legal counsel. Goldman, Sachs & Co. is working with Veritas, whose outside counsel is Simpson Thacher & Bartlett. The transaction is expected to close in the second calendar quarter of 2005 and is subject to customary closing conditions, including approval by the shareholders of both companies and regulatory approvals. The combined company would operate under the Symantec name. John W. Thompson, chairman and CEO of Cupertino, Calif.-based Symantec, would continue as chairman and CEO of the combined company. Gary L. Bloom, chairman, president and CEO of Mountain View, Calif.-based Veritas, would be vice-chairman and president of the combined company. The board of the combined company would include six members of Symantec’s current board and four from Veritas’ current board for a total of 10 members. A motivation for Symantec, best known for its Norton antivirus software, is a desire to diversify its offerings. “The transaction is being driven by Symantec’s desire to reduce their reliance on the antivirus market,” said Kevin Buttigieg, an analyst at A.G. Edwards & Sons Inc. in New York. The aggregate revenue of the combined company is expected to be about $5 billion for fiscal year 2006, which begins in April 2005 and ends in March 2006. About 75 percent of the revenue of the combined company is expected to come from the enterprise business and 25 percent from the consumer business. In addition, the combined company would have about $5 billion in cash. Non-GAAP earnings per share for this transaction, which exclude the amortization of deal-related intangibles, the write-down of Veritas’ deferred revenue, restructuring charges, amortization of deferred compensation and any one-time costs associated with the merger, would be accretive in the first combined year of operations as compared to the Thomson Financial First Call mean estimate of $0.98 for Symantec in fiscal year 2006. Cheryl Meyer contributed to this report. Copyright �2004 TDD, LLC. All rights reserved.

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