NAI revisits McAfee.com takeover bid
House in order
Santa Clara, California-based NAI already owns 75% of McAfee.com and in April 2002 dropped its $224m bid to acquire the 25% it spun off via a 1999 IPO after discovering accounting errors in its own past financial statements. A review of the security and network management software vendor's past five years' worth of accounts threw up errors in its fiscal 1998, 1999 and 2000 statements.
The accounting errors occurred when NAI was under previous management, and are also being investigated by the SEC. With NAI's internal investigation over, and the company's statements in the hands of the SEC, it has decided to launch a third attempt to acquire consumer security services vendor McAfee.com
The original March 2002 offer of 0.675 NAI shares for each McAfee.com share was described by the McAfee.com board as "financially inadequate", and although NAI did not need the support of McAfee.com's board for the acquisition to go ahead, it upped the offer to 0.78 NAI shares in April 2002. McAfee.com's board then recommended that shareholders accept the offer before NAI's accounting problems caused the company to drop the bid.
NAI has now repeated its offer of 0.78 shares per McAfee.com share in a fresh bid that will be filed with the SEC on July 2. The offer is conditional on NAI owning at least 90% of McAfee.com Class A shares after its completion. If that condition is not met, NAI may still press ahead with the deal if more than 50% of McAfee.com shareholders (excluding NAI itself) tender their shares. McAfee.com would then be merged with an existing NAI subsidiary.
NAI is looking to acquire McAfee.com in order to reduce market confusion over its offerings. While the company spun-off McAfee.com in 1999 it retained the name for its McAfee Anti Virus Defense enterprise-focused software, McAfee ASaP managed security services unit and McAfee Consumer Products division.
The vague distinction between McAfee.com's consumer security services and Network Associates' similarly named consumer and business services was further blurred when McAfee.com started offering services to small businesses.