Spirent acquiring Caw for Layer 4 to 7 test

23 July 2002 -- UK-based Spirent plc is acquiring the remaining 85% of Caw Networks Inc, bringing new test technology at the application layer to Spirent's performance analysis.

Jul 29th, 2002

23 July 2002 -- UK-based Spirent plc is acquiring about 85% of the issued share capital and options of Santa Clara, CA-based Caw Networks Inc, giving it 100% ownership, for an initial consideration of USD49m (£31.6m). Deferred consideration (payable in Q1/2004) of up to USD60m (£38.7m) - expected to be satisfied by the issue of up to 32.3m Spirent shares - is payable on an earn-out basis dependent on certain technological milestones being achieved and incremental revenues of between USD22m and USD40m being delivering in 2003. In 2001 Caw's revenues were USD2.7m and operating losses were USD$8.8m.

Caw was founded in November 1999 and started shipping its first product ? the WebAvalanche capacity assessment appliance and WebReflector simulator - in February 2001. Products are focussed on the upper layers of the Open Systems Interconnection (OSI) protocol stack, namely the transport, session, presentation and application functional layers (Layers 4 to 7).

Caw's technology is designed to assist network equipment manufacturers, service providers and enterprise network application users in testing the performance of applications, devices and networks by simulating real-world traffic and end-user behaviour at high traffic volumes.

In October 2001 Spirent entered into a Technical Development and Resale agreement covering the marketing of WebAvalanche and WebReflector and bought a 15% holding for USD9.1m. In May 2002 Spirent and Caw jointly launched TeraCaw, the only integrated test platform currently on the market able to simultaneously analyse Layer 2 to 7 data.

Caw will bring new test technology at the application layer to Spirent's performance analysis. With the technology required for Layer 1 (physical) to Layer 3 (network) testing now established, the ability to test all the Layers 1 to 7 is becoming a critical requirement. Users are seeking solutions to investigate and test performance and interaction of both the lower and upper network layers.

Also, the acquisition enhances Spirent's opportunities to address the corporate IT market, as the ability to test the application layer is critical for any organisation that depends on the integrity, security and reliability of its website to conduct business with its customers. There are also opportunities for development and integration of Caw's technology with Spirent's existing Layer 1 to 3 expertise to test a growing range of applications.

Spirent CEO Nicholas Brookes said: "This acquisition provides us with key software technology to pursue a new and critical sector of the market that is highly complementary to our existing performance analysis capabilities. With Caw's technology, we will be able to provide comprehensive Layer 1 to 7 solutions enabling us to further penetrate our existing customer base and broaden our reach in the enterprise IT market."

www.spirent.com

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