Santa Clara, California-based Network Associates announced this morning it is buying British antivirus software maker Dr. Solomon for $640 million.
Network Associates was formed last year by the merger of McAfee Associates and Network General. Network Associates CEO Bill Larson said the acquisition of Dr. Solomon was necessary if his company was going to compete in a market dominated by titans like Computer Associates and IBM's Tivoli unit.
First on the agenda for Network Associates, once the merger clears regulatory and shareholder hurdles, is integrating Dr. Solomon's Anti-Virus Toolkit into Network Associates' enterprise security suites, the Total Defense Suite, and Net Tools Secure, a bundled package of antivirus tools, encryption, authentication, firewalls, intrusion detection, and scanning technology.
Network Associates executives, quoted by Nasdaq, said holders of Dr. Solomon's ordinary shares would receive 0.27625 of Network Associates' common stock.
Dr. Solomon's ADS represents three of Dr. Solomon's ordinary shares, this is equivalent to 0.82875 shares of Network Associates' common stock.
Network Associates executives said the deal would modestly dilute earnings in the third quarter before a one-time charge for expenses and associated costs.
But the company added that the purchase, which it said demonstrated its commitment to deliver world-class enterprise security products to the global market, was expected to be "modestly accretive" for earnings in the financial year ending 1999.