Network Associates buys Dr Solomon's

Network Associates is to acquire rival antivirus software vendor Dr. Solomon's Group PLC, based in the UK, for more than $US640 million.

The stock swap transaction will give Dr. Solomon's shareholders 0.27625 shares of Network Associates' common stock for each Dr. Solomon's ordinary share. The deal is expected to close August 30. It is subject to approval from federal regulators and Dr. Solomon shareholders.

Network Associates anticipates taking a one-time charge in the third quarter of this year related to expenses and other charges in the acquisition.

Combining the rival antivirus vendors has a "huge, huge potential payoff," said Bill Larson, Network Associates chief executive officer (CEO). Network Associates formed last October with the merger of McAfee Associates and Network General.

"Network Associates is committed to being a truly European company," Larson said, adding that the merger will put the firm on course to "becoming a truly multinational company".

Because of UK law, Larson declined to offer specifics about the likely market share of the merged company.

The merged company eventually will have software on 60 million desktop computers, Larson predicted. The antivirus market is different from other software markets because it creates its own renewal stream with users upgrading every few years. Even when the market is more saturated, the merged company should see growth of at least 16 per cent to 20 per cent, which is the growth rate of PCs, he said.

"This is a deal we've been trying to do for many years because we thought it made sense to us," Larson said.

Soon after the acquisition is complete, Dr. Solomon's Anti-Virus Toolkit will be available with Network Associates' enterprise security suites, the Total Virus Defense Suite and Net Tools Secure. The bundled security software package offered by the company represents the future for the market, Larson said.

"We won't be talking in a year from now about the antivirus market or the encryption market or the firewall markets," he said, adding that integrated security software packages increasingly will be offered.

Geoff Leary, Dr. Solomon's CEO, had little to say at a combined press and analyst conference, except that he believes the merger opens opportunities for his employees, shareholders and partners.

"The time is right," he said, "for what we believe is a change in direction, a new era."