Network Associates Renews Contested Bid For McAfee.com

Network Associates renewed the bid three days after it delayed the offer and disclosed its fiscal 2000 accounting practices were being investigated by the Securities and Exchange Commission.

"We wanted to give the market the opportunity to absorb the information before going ahead with the offer," Steve Richards, chief financial officer at Santa Clara, California-based Network Associates, told Reuters. "There's no certainty when the SEC will commence the questioning or conclude the questioning. It could go on for quite some time."

The renewed offer, which is due to expire at midnight April 25, would give McAfee.com shareholders 0.675 shares of Network Associates common stock for each outstanding Class A McAfee share.

McAfee.com's board has 10 business days to file their position with the SEC, Richards said. McAfee.com executives did not return a call seeking comment.

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If the tender offer and merger are completed, McAfee.com will become a wholly owned subsidiary of Network Associates and McAfee.com shares will no longer trade publicly.

Based on Network Associates' closing price of $24.20 on Thursday, the deal was valued at about $209.4 million, according to a Network Associates spokeswoman. The markets were closed Friday for the Good Friday and Passover holidays.

Network Associates spun McAfee.com off three years ago but continues to own about 75 percent of the company. McAfee.com sells subscriptions to antivirus and PC management services.

"We're looking forward to having this back as one company, eliminating overlap in some of our product offerings and being the strongest offering to consumer market," Richards said.

McAfee.com said on Sunday that its board had rejected Network Associates' original March 16 bid, calling it "financially inadequate." On Monday, Network Associates stood by its offer, saying it was confident the offer would be well received by shareholders.

Network Associates, which competes against Symantec , has been reorganizing its operations since Chief Financial Officer Steve Richards and Chairman and CEO George Samenuk came on board in early 2001.

The March 26 disclosure of the SEC probe, while believed to focus on the practices of Network Associates' previous management team, sparked an 11 percent drop in the company's share price that day and led two Wall Street analysts to cut their ratings on the stock.

But the share price recovered somewhat in following days, after dipping to a low of $22.23 Tuesday after the announcement of the SEC investigation. McAfee.com's also rallied this week.

When Network Associates first made the offer, it said it represented a 20 percent premium on McAfee.com stock. "So they've gotten the premium in the open market in anticipation of our offer," said Richards.

Network Associates has said it believes the probe is focused on the company's method in 2000 of booking revenues when products were shipped to distributors instead of when customers bought them.

The company announced that it was changing that practice in December 2000, the same day it announced a revenue shortfall and the resignation of its top three executives.

+REUTERS

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