INS Acquires IT Consultancy Predictive

Network and IT security consultancy International Network Services (INS)
has acquired New York-based Predictive Systems in a cash
transaction valued at about $19.2 million.

The transaction, announced today, leaves Predictive as a wholly
owned subsidiary of INS. It also reflects the difficult market conditions
for providers of network-security consulting services in the midst of a
slowdown in IT spending in the past two years.

In addition, major tech services vendors such as IBM and HP are increasingly bundling
networking security in their practices, putting more competitive pressure on smaller firms.

Predictive had been an acquirer itself in October of 2000 when it bought networking-security firm Global
Integrity
in a $107.6 million cash and stock deal.

The companies said Predictive Systems shareholders would receive
between 41 cents and .458 cents per share, subject to certain conditions, or
about $19.2 million in cash. The deal is subject to further adjustment
based on the estimated net assets of Predictive Systems right before the
closing of the merger, Predictive said in a release Wednesday.

Predictive said it plans to issue a press release announcing the finally
determined per share consideration on the third trading day prior to a
special meeting of Predictive Systems stockholders.

Shares of Predictive closed at 38 cents Wednesday, up 11 cents, about
41 percent, after the deal was announced.

Wednesday’s acquisition brings INS to about 700 employees with over 30
offices in the U.S. and six internationally.

David Butze is expected to continue as president and CEO of INS, which
will retain its headquarters in Santa Clara, California. Andy Zimmerman,
CEO of Predictive Systems, is to remain with the company through the
completion of the sale, slated for the second quarter.

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