Network Associates Struggles to Keep Bid Alive

Network Associates Inc.’s continuing attempts to buy back have hit yet another snag.

NAI’s exchange offer — composed of .90 shares of its common stock in a tax-free exchange for each outstanding share of’s
Class A common stock — was set to expire at midnight Tuesday. But the company, which currently owns about 78 percent of,
had conditioned the exchange on acquiring at least a majority of the common stock it does not already own. Instead, only about 4
percent of McAfee’s shares have been tendered through the exchange offer.

Not willing to back down, NAI Wednesday said it would extend the offer until midnight on Aug. 13, and even indicated it may extend
the deadline further if necessary.

But Srivats Sampath, president and chief executive officer of, took NAI’s failure to complete the offer by the original
deadline as a sign that his company’s stockholders are not ready to settle for NAI’s offer and demanded more.

“With approximately 4 percent of shares tendered, our stockholders agree with our board of directors — the Network Associates offer
was financially inadequate and substantially undervalued both our current business and our future potential,” he said in a statement
Wednesday.” Our board of directors remains dedicated to creating shareholder value. While there are long-term benefits to
re-combining these companies, our stockholders have made clear that the latest offer did not present a fair value for their shares.”

He added, “We call upon Network Associates either to increase its offer to a level that the board of directors of can
support or to promptly terminate and withdraw its offer so that both companies can move forward and focus on building value for our
respective stockholders.”

NAI has already sweetened the pot once. It originally made
its unsolicited exchange offer in March, holding out .675 shares in exchange for each outstanding share. But after’s board rejected that offer as insufficient, NAI briefly suspended its buyout bid due to an ongoing U.S. Securities and Exchange Commission
into its accounting practices. In July, NAI returned to the table and upped its offer to .90 shares for each share of

At the time, NAI was confident’s shareholders would ignore their board and agree to the offer. “We think the shareholders
will take a look at the offer and find it to be attractive,” Kent Roberts, Network Associates’ general counsel, said at the time.
“There was too much confusion in the market about the name and our McAfee product line. This deal is about a more unified

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