Despite the deal seeming to be on the brink of completion, Network Associates on Thursday said that it is withdrawing its bid to buy out its subsidiary McAfee.com after discovering accounting irregularities that will cause it to restate its 1999 and 2000 financial results.
The discovery was made during an internal investigation of the company's books, according to a statement released by the Santa Clara, California, company. Network Associates' accounting practices in 2000 are also under investigation by the US Securities and Exchange Commission. NAI does not expect to have to restate any of its 2001 or first quarter 2002 figures, the company said.
As a result of the revelations, NAI announced that it would withdraw its offer of 0.78 shares of NAI stock for each outstanding share of McAfee.com stock. McAfee.com shareholders had until Thursday to vote on whether to approve the buyout or not, though McAfee.com's board had already voiced its approval.
The buyout process has been a start-and-stop affair for NAI and McAfee.com. McAfee.com had rejected NAI's original offer of 0.675 shares in late March. The day after that rejection, NAI announced the SEC investigation and postponed the acquisition. However, three days after that NAI announced that it would reinstate its bid.