Network Associates buys PGP for $36m

Network Associates, formerly known as McAfee Associates, is acquiring Pretty Good Privacy (PGP), a privately held company that develops encryption software, for $36 million in cash and stock.

The announcement follows on the heels of the acquisition of Network Solutions, announced in October and completed last week. Network Associates announced that the merger between McAfee and Network General had been completed ahead of schedule. The name change was adopted to underline McAfee's transformation from an antivirus vendor to a supplier of enterprise network security and management systems.

PGP develops desktop encryption software based on the Diffie-Hellman public key algorithm, which is now in the public domain. PGP competes with RSA Data Security's secure multipurpose internet mail extension (S/Mime).

Microsoft and Netscape support S/Mime in their latest email clients, while Qualcomm in its Eudora client supports PGP.

PGP's software started off as freeware posted on the internet. The company was reportedly in poor financial health.

The acquisition of PGP was designed to beef up Network Associates' security offerings. The PGP desktop encryption software will become part of a suite called the Total Network Security Suite.

Network Associates will offer four product suites: Total Virus Defense, Total Network Security, Total Network Visibility and Total ServiceDesk.