Network Associates Sells PGP Line

Following a fitful yearlong search of a buyer for two lines of its privacy
products, Network Associates sold off its wireless and
desktop lines of PGP encryption products to PGP Corp., a Palo Alto,
Calif.-based startup.

The deal calls for PGP Corp. to acquire PGPMail, PGPfile, PGPdisk,
PGPWireless, PGPadmin, and PGPkeyserver, in addition to PGPsdk software
development kit and PGP Corporate Desktop. Network Associates will keep
products developed using PGPsdk encryption development software, including
those serving McAfee anti-virus software: McAfee E-Business Server for
encrypted server-to-server file transfer, McAfee Desktop Firewall, and
McAfee VPN Client.

Financial terms of the transaction were not disclosed.

“Customers will benefit from PGP Corp.’s dedication to the continued
development of PGP desktop and wireless technology,” said Sandra England,
Network Associates’ executive vice president of business development and
strategic research, in a statement.

Santa Clara, Calif.-based Network Associates will continue to serve clients
using the desktop and wireless PGP products until October, when PGP Corp.
will take over service.

Network Associates announced
in October 2001
that it would sell off its PGP encryption and Gauntlet
firewall product lines, in order to concentrate on three business areas:
anti-virus software; network and application management; and Web-based
service desk software. Secure Computing Corp. purchased Gauntlet for an
undisclosed sum in February.

However, in March, five months into its search for a PGP buyer, Network
Associates said it would halt its search, after receiving disappointing

Network Associates eventually found a buyer thanks to Doll Capital
Management and Venrock Associate, which invested $14 million in newly formed
PGP Corp. The VCs are staking their money on the continued popularity of the
decade-old PGP encryption technology .

PGP, which stands for “pretty good privacy,” was developed as a freeware
program by Phil Zimmerman in the early 90s to provide secure e-mail and file
storage using a public key system. Network Associates bought the technology
in 1997.

In the past decade, PGP has become the standard for e-mail encryption,
despite a brief tangle with the U.S. government over national-security
concerns. The government dropped the case, but some foreign governments
still restrict the use of the encryption technology.

Network Associates has been embroiled in a drawn-out
to buy the 22 percent of shares it does not already
own.’s management, board of directors, and shareholders rejected
Network Associates’ bids as too low. Last week, Network Associates’ raised its
bid again
, and has formed a special advisory board to
recommend action.

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