Network Associates renews contested bid for McAfee

SAN FRANCISCO: Computer security provider Network Associates Inc. on Friday

pushed forward with its contested plan to buy the rest of anti-virus software

McAfee.com Corp. for about $210 million, a price McAfee's directors have already

rejected as too low.

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.

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.

Standing by



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 Corp., 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.