Network Associates' $642 million acquisition of its most bitter rival, Dr Solomon's, is fraught with problems, according to the company most threatened by the merger, Symantec.
Gunilla Larsson, Symantec's communications manager for northern Europe, commented: "We weren't surprised. It's been common knowledge for some time that Dr Solomon's was up for sale at the right price, but $642 million is very high for a company valued at $90 million."
Larsson would not confirm that Symantec considered buying the UK's best known anti-virus supplier. She said: "We allied with IBM instead, and just over a week later, Network Associates announced this acquisition. That speaks for itself."
Analysts have expressed doubts about the deal. The products appear to be in competition and the cultures are diametrically opposed. Network Associates merged with Bill Larson's McAfee Associates last year, and he heads Network Associates. He has gunned for Dr Solomon's throughout, ridiculing the company in hard hitting advertisements and gaining the opprobrium of the UK Advertising Standards Authority.
On product strategy, he plans to merge the best of both into Dr Solomon's Virsus Scan, due first quarter next year, which will become part of Network Associates' Total Virus Defence suite.
Larsson remarked: "We see Dr Solomon's as a company doing a very good job, it's a nice competitor, but Network Associates has always been aggressive. The two companies hate each other and it will be interesting to see how they resolve their differences in the future.
She added: "There are other issues like pricing and channel strategy. Dr Solomon's, traditionally, operates at higher prices, while McAfee operated very aggressive pricing policies [instigating] a price war. Secondly, neither company has a clear channel strategy, which is critical in today's market. Network Associates is criticised in the US for focusing on acquisitions and neglecting the channels."
Does Symantec anticipate a head-to-head with the enlarged Network Associates, which plans to generate over 40 per cent of revenues outside the US?
Larsson responded: "According to Romtec, by the end of 1997 we led the anti-virus market in mail order and retail sales. We are hitting Dr Solomon's in the UK. The deal with IBM means we have access to IBM's database of corporate customers, and IBM's Immune technology will be combined with Norton technology."
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