Network Associates plans to acquire all publicly held shares in McAfee.com through a stock swap in a bid to turn the Californian antivirus software vendor into a wholly owned subsidiary.
The offer is expected to be formally filed with the US Securities and Exchange commission on or about March 25, Network Associates said on Monday.
Under the terms of the deal, McAfee.com shareholders will be offered 0.675 shares of Network Associates common stock for each outstanding share of McAfee.com Class A common stock, Network Associates said in a statement. The network security company currently owns approximately 75 per cent of McAfee.com, it said.
"I think it opens up a lot of possibilities on how we can compete against Symantec and other companies, and clearly one combined entity is stronger than two separate entities," George Samenuk, Network Associates' chairman and CEO, said in a conference call announcing the bid.
"I think this gives us the opportunity to offer not only retail (antivirus protection) but this McAfee.com service to many users across the world," he added.
Samenuk said his company believes there is growing awareness of viruses, especially in view of the large number of malicious-code attacks last year.
"We believe there's tremendous growth potential not only in the US, but especially outside the United States for our McAfee and McAfee.com consumers and small-to-medium businesses," he said.
Officials declined to say how or where the new McAfee would operate after the merger, or what changes might result for customers.
"We are running two separate publicly held companies, and there's certainly some overlap in terms of services here, but until the deal is actually completed there isn't much we can say about synergy opportunities," said chief financial officer and chief operating officer Steve Richards.
Based on the March 15 closing price of $US27.61 per share for Network Associates and $15.54 per share for McAfee.com, the offer represents a value of almost $18.64, or a premium of almost 20 per cent, per McAfee.com share, according to a company statement.
In a statement, McAfee.com officials acknowledged the Networks Associate proposal, noting that Network Associates intended to put the proposal directly to McAfee.com shareholders for approval rather than the company's board of directors.
In light of the proposal, McAfee.com's board of directors has assembled a special committee of independent and outside directors to determine the company's options and make recommendations to the board of directors. Within 10 business days of the commencement of Network Associates' exchange offer, McAfee.com's board expects to make public its recommendation to shareholders whether to accept or reject the proposal. The board may also decide to stay neutral, the McAfee.com statement said.
So far, the board has not reached a decision on the matter, it said.
Network Associates said the deal would cause a $0.01 decline in the 2002 pro forma earnings per share (EPS) for the consolidated entity. The decline in EPS would be caused by the issuance of approximately 8 million shares necessary to complete this transaction, the company said.
Rick Perera in Berlin contributed to this report.