Network Associates bids again for McAfee

SANTA CLARA: Computer security provider Network Associates Inc. on Monday

said it will bid again for the 25 per cent of anti-virus services company

McAfee.com Corp. it does not already own after pulling an earlier offer because

of its own accounting problems.

The $180.4 million offer has the same terms as Network Associates' previous

bid, but the deal is worth $44 million, or about 20 per cent, less than when

Network bid back in April because of the decline in its stock price.

McAfee wasn't immediately available for comment. Network Associates, which

owned all of McAfee before spinning it off in 1999, has said buying McAfee --

which makes similar products and services -- will improve ties with an

overlapping customer base.

Network said it decided to bid again because it had filed its restated

financial statements on June 28 and that operating results for 2001 and the

first quarter of 2002 were unchanged. Network said it will offer McAfee.com

shareholders 0.78 of a share of Network Associates stock for each McAfee share

starting on July 2.

Network Associates had first bid for McAfee in March based on an exchange

rate of 0.675 McAfee shares per Network Associates share, which at the time

valued the 25 per cent stake at $210 million, an amount McAfee rejected as too

low. In early April, it raised that rate to 0.78, which put the offer at $224

million, and McAfee accepted the sweetened offer.

Then Network Associates, already under investigation by the US Securities and

Exchange Commission, said it had found accounting inaccuracies during routine

tax filings that would change 1999 and 20000 revenue and expenses. Two weeks

later, on April 25, it called off the offer, citing the accounting problems,

which it said were unrelated to the SEC probe.

At the time, McAfee chief executive Srivats Sampath said he would only

contemplate a deal once Network Associates fully resolved its accounting

problems. "If they come back in two weeks I would be mildly

irritated," he said. "They need to go and get their act together ...

and then let's come back and take a look at this."

Network Associate shares have lost 32 per cent so far this year while McAfee

shares have fallen 56 per cent.

(C) Reuters Limited.