After repeatedly denying their parent company's attempts to bring them back into the corporate fold, McAfee.com's special board of directors last Friday recommended that the company's shareholders tender their stock to Network Associates, bringing the two companies one step closer to reunion.
Under the deal recommended by McAfee.com's board, McAfee.com shareholders would receive 0.675 shares of Network Associates (NAI) stock for each share of McAfee.com stock they hold, as well as US$8 in cash for each outstanding share. NAI had previously been rejected by both McAfee.com's board and by its shareholders in a number of attempts to recombine the two companies. The offer recommended Friday was made in mid-August, after McAfee.com shareholders rejected a previous offer in late July.
Even with the recommendation of McAfee.com's board, the deal is not yet final. McAfee.com's shareholders must now vote on whether to tender their shares to NAI. NAI already owns 75 percent of McAfee.com's shares and must receive either a majority of the votes, or enough votes to bring the company's total ownership stake to 90 percent, for the deal to go through.
McAfee.com shareholders have until midnight eastern time on Sept. 12 to make their decisions.
NAI, which is located in Santa Clara, California, is seeking to reacquire the Sunnyvale, California, McAfee.com in order to capitalize on McAfee.com's range of managed security services, as well as to cut down on consumer confusion between McAfee.com and NAI's own McAfee Security division.
NAI spun McAfee.com off as a separate company in 1999, but has worked to fold the company back in since March. NAI originally offered McAfee.com shareholders 0.675 shares of NAI stock for each McAfee.com share, but eventually raised the offer as high as 0.90 shares after the board rejected earlier deals.
The two companies appeared to have a deal in place in April, but NAI withdrew its bid after disclosing accounting irregularities that forced to restate its earnings for 1998, 1999 and 2000. Network Associates said at the time it made the most recent offer that if it did not reacquire McAfee.com on this bid it would seek other opportunities.
Markets reacted badly to the deal, sending both companies' stock down in early morning trading. McAfee.com (MCAF) was down $0.60, or 3.26 percent, to $17.80. NAI (NET) was also down $0.82, or 5.29 percent, to $14.68.