Avocent Acquires Touchpaper And Ergo 2000, In A Strategic Move To Bolster Its Desktop To Data Centre Solutions

Published 7th July 2008

Move to Expand Avocent’s Leadership in IT Operations Management...

01 July 2008 – Avocent Corporation (NASDAQ: AVCT) today announced that it has completed the acquisition of Touchpaper Group Limited, a privately held provider of IT business management solutions based in Woking, U.K., for approximately £23 million (approximately $45 million). Avocent also announced that it has signed a definitive agreement to acquire the assets and liabilities of Ergo 2000, Inc., a privately held provider of rack-mounted LCD consoles based in Fullerton, California, for approximately $27.5 million.

Touchpaper had revenues of approximately £17.5 million (approximately $34 million) in 2007, and Ergo 2000 had revenues of approximately $33 million in 2007. Avocent expects that the Ergo 2000 acquisition will close later this quarter and that each will be accretive to operational earnings per share in 2008. These acquisitions are part of an ongoing, larger strategy to invest in and enhance Avocent product offerings in IT Operations Management.

“With these acquisitions, Avocent continues to expand the IT Operations Management solutions that reach from the desktop to the data centre,” said Avocent Interim CEO Edwin L. Harper. “The Touchpaper technology has been integrated into the Avocent LANDesk Service Desk product for nearly two years. This acquisition will broaden our desktop management solutions as well as fully integrate with our existing data centre solutions,” Harper continued.

“Both acquisitions deliver on Avocent’s promise to help IT operations handle and simplify the growing complexity of managing data centre and desktop assets in today’s organisations,” added Harper. “Avocent has taken an aggressive position in delivering the framework and toolsets necessary for enterprises to realise a solid ROI on their IT investment,” he said.

In acquiring Touchpaper, Avocent further extends its portfolio of incident management, problem management, and service desk capabilities. Today, Avocent’s use of Touchpaper technology enables service desk technicians to consolidate call logging, problem management, configuration management and change management into a single application that greatly smoothes the process of trouble ticketing for customers.

“As a global provider of relocation services, we rely on Avocent’s technology to enable our IT personnel to be proactive and more productive when handling service desk requests,” said Joseph Leyva, Service Desk Supervisor of Graebel Companies. “By integrating service desk technology with IT best practices, such as ITIL (IT Infrastructure Library), we can resolve problems efficiently and stay focused on our core business.”

Avocent plans to integrate Touchpaper technology with its management software and platforms to bring service desk functionality to data centres, enabling a tighter coupling of service management into IT Operations Management.

With the acquisition of the assets of Ergo 2000, Avocent further expands its portfolio of advanced rack management products, an important component of IT Operations Management in the data centre. Ergo 2000 reduces the time and cost of diagnosis and remediation of problems in the data centre through the use of an LCD rack-based console that can enhance switch capability and provide a means for spotting problems with any servers in the rack and quickly resolving them before they can cause system downtime. Ergo 2000’s product portfolio aligns well with Avocent’s market-leading console switching products and will contribute revenue growth opportunity for both OEM and branded customers.

"Today's organisations are trying to keep up with the continuous pace of technology change and growing business requirements. The importance of management technologies to monitor and manage the wide array of hardware and software systems deployed in the enterprise has increased steadily,” said Natalie Lambert, Senior Analyst at Forrester Research, in the November 2007 report Topic Overview: IT Management Software. "Meanwhile, the increased attention being paid to governance, compliance, and financial responsibility leads firms to rethink their approach to IT management — shifting from the management of devices on the network to a more holistic focus on automating IT processes and delivering IT services back to the business."

The acquisitions allow Avocent to help its enterprise customers simplify the challenges of managing ever-increasing infrastructure complexity – from the desktop to the data centre – by providing an end-to-end IT Operations Management framework.

The purchases will be funded from Avocent’s cash and line of credit.

Conference Call and Additional Information
Avocent will host a conference call and live webcast today at 8:00 a.m. CT (9:00 a.m. ET) to discuss these acquisitions.

A simulcast of the conference call will be available online at www.avocent.com under the investor relations' tab as well as http://ir.avocent.com/. The online replay will be available on the Company's web site for approximately 30 days.