Under the terms of the agreement, Aladdin shareholders will receive $11.50 per share in cash for each share of common stock they hold. This represents a premium of approximately 20% over Aladdin's closing share price on January 9, 2009, the last trading day prior to today's announcement, and a premium of approximately 64% over Aladdin's closing share price on January 5, 2009, the last trading day prior to Aladdin's announcement that it was in continuing discussions with Vector Capital regarding a possible strategic transaction.

"After extensive negotiations and careful and thorough analysis, conducted with our independent advisors, the board has unanimously endorsed this transaction as in the best interests of the company and our shareholders," said Yanki Margalit, chairman and CEO of Aladdin Knowledge Systems.

Commenting on the announcement, David Fishman, partner at Vector Capital, said, "We believe that placing Aladdin's DRM and authentication assets under common management with those of our portfolio company, SafeNet, a global leader in information security, makes considerable strategic sense and will greatly benefit all stakeholders. Aladdin is an exceptional company, with significant potential and a strong commitment to its employees, partners and customers worldwide. We understand Aladdin's industry and business well, and look forward to working collaboratively to ensure a smooth and expeditious transition."

Vector Capital acquired SafeNet in March 2007 for $634 million.

The Aladdin transaction is subject to certain closing conditions, including the approval of Aladdin's shareholders, antitrust regulatory approvals, and the satisfaction of other customary closing conditions. Approximately 14% of Aladdin's outstanding shares in the aggregate are held by an affiliate of Vector Capital, and directors of Aladdin, including Mr. Margalit, have entered into a voting agreement for 19% of the outstanding shares pursuant to which they have agreed to vote all of their shares in favour of the transaction. There is no financing condition to consummate the transaction. The transaction is expected to close following the satisfaction of all closing conditions, which is anticipated to occur in the next two to three months. Wells Fargo Foothill, part of Wells Fargo & Company, has committed to provide debt financing in support of the acquisition.

The transaction will be presented to Aladdin shareholders for approval at Aladdin's Extraordinary General Meeting, which will be scheduled as soon as practicable.