McAfee Withdraws $1 Billion Bid to Buy Cheyenne
May. 01, 1996
NEW YORK (AP) _ McAfee Associates Inc. dropped its $1 billion offer to buy Cheyenne Software Inc. Wednesday, saying Cheyenne's rejection was not worth fighting.
Cheyenne's stock plummeted on the news but the company issued a statement saying it was pleased it no longer had to deal with the ``distracting issue'' of McAfee's offer.
Cheyenne shares finished down $4.25 to $19.75, a 17 percent drop, on the American Stock Exchange. McAfee shares rose $1.25 to $62.50 on the Nasdaq Stock Market.
The two software companies had held discussions privately last fall and in November about a merger.
But the talks took an unusual turn last month when Cheyenne disclosed McAfee's newest offer, at $27.50 a share, publicly and said it had rejected it. Typically, the refusal to accept a takeover bid is disclosed by the acquiring company and signals the start of a hostile takeover fight.
McAfee was surprised by Cheyenne's move but its executives then discussed their interests with Cheyenne institutional shareholders and analysts.
Cheyenne executives countered McAfee did not have the financial strength to make the deal work. McAfee, with sales of $90 million, is less than half the size of $250 million per year Cheyenne.
In a statement Wednesday, McAfee said it remained willing to discuss a friendly merger with Cheyenne.
Together, they would form the fifth-largest personal computer software company. Santa Clara, Calif.-based McAfee makes anti-virus and network management programs. Cheyenne, based in Roslyn Heights, N.Y., creates data storage management software.