McAfee to buy Network General for $1.4b

Meet the latest mega-giant formed by a mega-dollar merger.

McAfee Associates, which started out as a shareware company offering software on computer bulletin boards and the Internet, will become the tenth largest independent software company in the world. Late Monday, the company announced a $1.4 billion stock swap with Network General, paying about an 18 percent premium to acquire the company.

The combined company, which will be called Network Associates Inc., will employ about 1,600 people with a combined market capitalization officials said would be in excess of $4.5 billion.

McAfee, best known for developing antivirus software products such as NetShield and VirusScan, has also quietly emerged as a leading supplier of network management software. Network General, whose main stock in trade is in network security and management applications, is best associated in the public's mind with its Sniffer line of products.

During a conference call with reporters and analysts Monday afternoon, officials from both companies said the combination would prove attractive to corporate buyers looking for a single source of supply for network solutions.

The companies - Network General is in Menlo Park, Calif. and McAfee is in Santa Clara, Calif. are located about ten minutes driving time from each other's offices on Highway 101 in California's Silicon Valley.

"There's no product overlap," said Bill Larson, who will become the chairman and chief executive of the combined entity. "It's a little bit trite but there's no competition out there."

However, Larson declined to say whether there would be layoffs, saying it was too early to gauge.

McAfee's sales have climbed from $20 million to $345 million in four years.

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