McAfee Associates Inc. said it reached a definitive agreement to acquire Network General Corp. in a stock swap valued at $1.3 billion, creating the world’s largest network security and management company.
With revenues in excess of $600 million, the combined company would be the 10th-largest software company. “We would also be the fastest-growing software company, with revenue growth of 46 percent in 1997,” said Bill Larson, McAfee’s chairman and chief executive. Only Microsoft Corp. has faster growth, he said.
The new company, which will be renamed Network Associates Inc., would also be the dominant third-party software provider for so-called Wintel personal computers–those that use Microsoft’s Windows operating system and Intel Corp.’s microprocessors.
Santa Clara, Calif.-based McAfee is best known for its network anti-virus software. It also makes help desk automation software. Menlo Park, Calif.-based Network General makes software used to trouble-shoot computer networks. The companies’ products complement each other with very little overlap, McAfee said.
Under the terms of the deal, McAfee said, it will pay Network General shareholders 0.4167 shares for each share of Network General stock.
Larson said the deal would be “non-dilutive” to earnings. He added that there are “all sorts of upside opportunities” the companies will explore as the deal moves forward. Boards of both companies have approved the transaction, which is expected to close in about 90 days.
Larson will be chairman and chief executive of Network Associates, and Leslie G. Denend, Network General’s president and chief executive, will be president.
The news came after the stock market closed. McAfee shares rose $2 to $66.37, while Network General shares rose $2.50 to $23.37 in Nasdaq trading. Earlier Monday, Network General released second-quarter results that beat analysts’ estimates by a penny.
