8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 8, 2006

Mercury Interactive Corporation
(Exact name of registrant as specified in its charter)

Delaware	0-22350	77-0224776
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

379 North Whisman Road, Mountain View, California 94043
(Address of Principal Executive Offices)

(Registrant's Telephone Number, Including Area Code)
(650) 603-5200

(former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Solicitation material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 241.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 Item 1.01. Entry into Material Definitive Agreement

On January 8, 2006, Mercury Interactive Corporation (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shark Corporation, a wholly owned subsidiary of the Company, Systinet Corporation (“Systinet”) and Warburg Pincus Private Equity VIII, L.P., as the representative of Systinet’s stockholders. Pursuant to the terms of the Merger Agreement, the Company has agreed to acquire Systinet through the merger of Shark Corporation with and into Systinet, with Systinet surviving as a wholly owned subsidiary of the Company (the “Merger”).

The Company has agreed to pay, to the holders of Systinet stock, warrants and vested options, cash consideration equal to $105,000,000, plus the aggregate exercise price of all vested and unexercised Systinet options and warrants, minus certain of Systinet’s net liabilities at closing, each to be calculated in accordance with the provisions of the Merger Agreement. In addition, the Company has agreed to assume unvested Systinet options, which will be converted into options to purchase Company common stock at an exchange ratio based in part on the per share merger consideration. The parties have also agreed to establish an escrow arrangement pursuant to which $10,750,000 of the merger consideration will be held in escrow for a period of 18 months as security for any adjustment to the merger consideration as a result of the net liabilities calculation and for Systinet’s indemnity obligations under the Merger Agreement.

The Merger Agreement also contains other provisions, covenants, representations and warranties made by the Company and Systinet that are typical in transactions of this size, type and complexity.

The Merger is expected to close in the first quarter of 2006. Consummation of the Merger is subject to regulatory approvals and other customary conditions. As a result, there can be no assurances that the Merger will be completed or as to the timing thereof. The Merger Agreement contains termination rights for both the Company and Systinet, including a provision allowing either party to terminate the Merger Agreement if the Merger has not been consummated by March 31, 2006.

A copy of the press release issued by the Company on January 9, 2006 announcing the above-mentioned transaction is furnished as Exhibit 99.1 to this Current Report.

 Item 2.02. Results of Operations and Financial Condition.

On January 11, 2006, the Company issued a press release announcing selected preliminary financial results for the fourth quarter and year ended December 31, 2005. A copy of the press release, dated as of January 11, 2006, is furnished as Exhibit 99.2 to this Current Report and is incorporated herein by reference.

The information in this section of this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, and is not incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this report and irrespective of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

 Item 9.01. Financial Statements and Exhibits.

The following exhibits are furnished herewith:

99.1	Press release dated January 9, 2006
99.2	Press release dated January 11, 2006

These exhibits are furnished with this Current Report and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, and is not incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this report and irrespective of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 11, 2006	MERCURY INTERACTIVE CORPORATION
	By: /s/ David J. Murphy
	Name: David J. Murphy
	Title: Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated January 9, 2006
99.2	Press release dated January 11, 2006

EX-99.1

Exhibit 99.1

Contacts:

Robin Stoecker

Public Relations

(650) 603-5854

rstoecker@mercury.com

Michelle Ahlmann

Investor Relations

(650) 603-5464

mahlmann@mercury.com

MERCURY TO ACQUIRE SYSTINET TO CAPITALIZE ON HIGH-GROWTH SOA MARKET

Mercury Expands Mercury BTO Enterprise with Acquisition of Leader in Growing Service-Oriented Architecture Market

MOUNTAIN VIEW, CALIF. – JANUARY 9, 2006 – Today, Mercury Interactive Corporation (OTC: MERQ), the global leader in business technology optimization (BTO) software, announced it has signed a definitive agreement to acquire Systinet Corporation, a privately held company, for $105.0 million in cash.

     Systinet is a leading provider of service-oriented architecture (SOA) governance and lifecycle management software and services. Customers use Systinet technology to manage SOA business services and to build secure and reliable Web services. Systinet technology, when combined with Mercury BTO Enterprise™ offerings, will help enable customers to take a lifecycle approach to optimizing the quality, performance and availability of SOA business services.

     “We believe the combination of Mercury and Systinet will immediately position us as a leader in the high-growth SOA market,” said Tony Zingale, chief executive officer at Mercury. “Mercury continues to grow our BTO offerings to help customers optimize the business outcomes of their IT initiatives. Systinet’s technology and deep expertise in SOA combined with Mercury’s strong BTO market leadership introduces powerful product synergies and the ability to address a broader set of customer opportunities in the fast growing SOA market.” Systinet SOA products provide a “system of record” and a set of governance and lifecycle capabilities that help provide the visibility, control, quality and integrity critical to SOA success. Systinet products deliver capabilities for publishing and discovering business services; creating, managing and enforcing policies; and managing the full lifecycle of business services and other SOA assets. Key Systinet products include:

• Systinet Registry, which is a widely adopted business service registry for organizing, managing, discovering, and publishing reusable business services and other SOA assets;
• Systinet Policy Manager, which streamlines policy creation and management and automates service validation to help ensure only conforming services are published into production.

Mercury to Acquire Systinet to Capitalize On High Growth SOA Market Page 2

     "We are very excited to join with Mercury to accelerate our ability to help customers optimize the business outcomes of their SOA initiatives,” said Thomas Erickson, president and chief executive officer of Systinet. “The combination of Systinet SOA solutions and Mercury BTO Enterprise will provide Mercury customers with a more comprehensive approach to achieving reliable and predictable business outcomes from SOA initiatives.” Mercury plans to leverage Systinet products to help customers mitigate the risk to business outcomes of SOA initiatives. Customers will be able to use Mercury and Systinet offerings to deliver predictable, consistent business results from SOA initiatives; provide the control and visibility required to ensure the reuse of business services, and optimize the quality, performance and availability of SOA applications.

     The acquisition is subject to customary closing conditions and certain regulatory approvals, is expected to close during the first quarter of 2006 and is expected to be dilutive to Mercury’s earnings in 2006 and accretive in 2007.

Conference Call

      Mercury will host a conference call to discuss the acquisition at 7:00 a.m. Pacific Time today. A live Webcast of the conference call can be accessed through the company's Investor Relations website at http://www.mercury.com/ir. In addition, an archive of the Webcast can be accessed through the same link. The live call will also be available telephonically by dialing 800-289-0726 or 913-981-5545, conference call code 5647064. An audio replay of the call will be available until midnight on January 15, 2006. The audio replay can be accessed by calling 888-203-1112 or 719-457-0820, conference call code: 5647064.

ABOUT MERCURY

      Mercury Interactive Corporation (OTC: MERQ), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today. Mercury provides software and services for IT Governance, Application Delivery, and Application Management. Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications. Mercury BTO offerings are complemented by technologies and services from global business partners. For more information, please visit http://www.mercury.com

ABOUT SYSTINET

     Systinet provides a leading foundation for SOA governance and lifecycle management. Founded in 2000, Systinet’s proven and standards-based products, including Systinet Registry and Systinet Policy Manager, help enable IT organizations to rapidly leverage existing technology investments, provide interoperability between heterogeneous systems, and better align business processes with IT. Customers

Mercury to Acquire Systinet to Capitalize On High Growth SOA Market Page 3

receive the benefits of a simpler, faster, standards-based way to dramatically improve IT responsiveness and technology asset reuse, while helping to maximize the ROI for SOA.

Forward Looking Statements

This press release contains “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury’s future product and service offerings and the benefits expected from this acquisition. Mercury’s actual product and service plans and results and the benefits expected from this acquisition may differ materially from the forward-looking statements made by, or on behalf of, Mercury. The potential risks and uncertainties include, among other things: 1) difficulties in integrating the Systinet business and offerings with Mercury’s business and offerings; 2) the timing of completion of the Company’s review, restatement and filing of its historical financial statements and the filing of its Forms 10-Q for the second and third quarters of fiscal year 2005, 3) the nature and scope of the ongoing SEC investigation, 4) the timing of the availability of Mercury products, services, product enhancements and service enhancements; 5) the failure of Mercury products, services, product enhancements and service enhancements to meet customers’ expectations, needs or perform as described; 6) the dependence of Mercury’s financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy; 7) the ability to increase sales through our direct and indirect channels, as well as international sales; 8) intense competition for Mercury’s products and services; and 9) the additional risks and important factors described in Mercury’s SEC reports, including the Annual Report to Stockholders on Form 10-K for fiscal year ended December 31, 2004, and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, which are available at the SEC’s website at www.sec.gov. All of the information in this press release is made as of the date of this press release, and Mercury undertakes no duty to update any forward-looking statements.

# # #

Mercury, Mercury BTO Enterprise and the Mercury logo are trademarks of Mercury Interactive Corporation and may be registered in certain jurisdictions.

All other company, brand and product names may be trademarks or registered trademarks of their respective holders.

MERCURY
www.mercury.com
379 North Whisman Road
Mountain View, California 94043
Tel: (650) 603-5200
Fax: (650) 603-5300

EX-99.2

Exhibit 99.2

Investor Relations Contact
Michelle Ahlmann, 650.603.5464

Public Relations Contact
Robin Stoecker, 650.603.5854

MERCURY REPORTS SELECTED PRELIMINARY FOURTH QUARTER AND FULL YEAR RESULTS

• Revenue Growth of 22 Percent to 24 Percent for Full Year 2005
• Company Closes Record Number of Deals Greater Than $1 Million Dollars in Q4 2005

MOUNTAIN VIEW,CALIF.,—JANUARY 11,2006— Mercury Interactive Corporation (OTC: MERQ), the global leader in business technology optimization (BTO) software, today announced that based on its preliminary review of its fourth quarter results, it expects full year revenue growth of 22 percent to 24 percent compared to the previously provided range of 23 percent to 27 percent growth that it announced in its July 28, 2005 press release.

      “We are very proud of how our company executed worldwide under very challenging circumstances,” said Tony Zingale, president and chief executive officer at Mercury. “We are also very encouraged with the significant investments that our customers continue to make in the Mercury BTO Enterprise. We had more than 25 deals greater than $1 million dollars in the fourth quarter and solid performance across all geographies and product lines.”

     Due to the pending restatement, Mercury is not able to give GAAP net income or fully diluted earnings per share, and non-GAAP net income or fully diluted earnings per share for 2005 at this time. Mercury expects to report complete financial results for the fourth quarter of 2005 following the completion and filing of its restated financial statements and SEC filings.

ABOUT MERCURY     Mercury Interactive Corporation (OTC: MERQ), the global leader in business technology optimization (BTO) software, is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today. Mercury provides software and services for IT Governance, Application Delivery, and Application Management. Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications. Mercury BTO offerings are complemented by technologies and services from global business partners. For more information, please visit http://www.mercury.com.

Mercury Reports Selected Preliminary Fourth Quarter and Full Year Results Page 2

FORWARD LOOKING STATEMENTS

     This press release contains “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury’s expected financial performance for the fourth quarter of fiscal 2005, as well as Mercury’s future business prospects and product and service offerings. Mercury’s actual fourth quarter results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among other things: 1) fourth quarter 2005 revenues, expenses and earnings per share; 2) the mix of perpetual and term licenses in the fourth quarter and the effect of the timing of the recognition of revenue from products sold under term licenses; 3) the timing of completion of the Company’s review, restatement and filing of its historical financial statements and the filing of its Form 10-Q for the second and third quarters of fiscal year 2005; 4) costs incurred by Mercury in connection with the Special Committee investigation and the SEC investigation; 5) the nature and scope of the ongoing SEC investigation; 6) the risk that the Company will not achieve relisting on The NASDAQ National Market; 7) the effect of any third party litigation arising out of the Special Committee investigation; 8) dependence of Mercury’s financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy; 9) the timing of the availability of Mercury products, services, product enhancements and service enhancements; 10) the failure of Mercury products, services, product enhancements and service enhancements to meet customers’ expectations, needs or perform as described; 11) the ability to increase sales through our direct and indirect channels, as well as international sales; 12) intense competition for Mercury’s products and services; and 13) the additional risks and important factors described in Mercury’s SEC reports, including the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2005, which is available at the SEC’s website at http://www.sec.gov. All of the information in this press release is made as of January 11, 2006, and Mercury undertakes no duty to update this information.

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Mercury, Mercury Interactive and the Mercury logo are trademarks of Mercury Interactive Corporation and may be registered in certain jurisdictions. Other product and company names are used herein for identification purposes only, and may be trademarks of their respective companies.

MERCURY INTERACTIVE CORPORATION
379 N. Whisman Road
Mountain View, CA 94043
Tel: (650) 603-5200 Fax: (650) 603-5300
www.mercury.com