Intel to buy McAfee for $US7.68 billion

Intel said the deal will enable it to bolster hardware security and also address a range of Internet-connected devices

Intel plans to acquire security vendor McAfee in a cash deal valued at about $US7.68 billion and aimed at enhancing the chip maker's mobile strategy.

Both boards of directors have approved the deal, and McAfee is expected to become a subsidiary within Intel's Software and Services Group. McAfee develops a variety of security software for end-users and enterprises, including antivirus applications, firewalls and intrusion protection systems.

Intel said that the current approach to security does not address the full range of Internet-connected devices, including TVs, cars, medical devices and ATM machines. "Hardware-enhanced security" will be needed to counter increasingly sophisticated threats, said Renée James, Intel senior vice president, and general manager of the group.

McAfee CEO Dave DeWalt wrote in a blog post that "current cybersecurity model isn't extensible across the proliferating spectrum of devices."

"The industry needed a paradigm shift, incremental improvements can't bridge the opportunity gap," DeWalt wrote. "There is no better partner that we could have found than Intel."

Intel president and CEO Paul Otellini said during a conference that the deal illustrates what Intel regards as the three most important pillars of computing today: energy efficiency, Internet connectivity and security. Everywhere Intel sells a microprocessor is also an opportunity for a security sale as well, he said.

"We believe that security will be most effective when enabled in hardware," Otellini said. Intel will continue to work with other security vendors as well, he said.

Security technology needs to be combined with hardware in order to deter new threats, said James during the call. Intel will bolster its hardware with technology that comes from McAfee's current products, she said. The first results of that collaboration will be announced next year, she said.

The deal is expected to close after McAfee shareholder approval and regulatory clearances. Intel said the acquisition will have on a GAAP basis a slightly dilutive effect on its earnings in the first year of operations and a flat effect in the second year.

McAfee generated approximately $US2 billion in revenue in 2009, and has about 6,100 employees. The company has had double-digit growth over the last year and was an attractive acquisition target, and rumors had been circulating for some time, said Ruggero Contu, senior research analyst at Gartner.

But an acquisition by Intel is surprising, Contu said. "I would have thought that in terms of synergies, I would have thought other players would have" been better positioned to integrate McAfee into their operations, he said.

Intel would be wise to continue McAfee's successful consumer security software business, as it has been bringing in increased revenue, Contu said. In terms of the overall security market, the acquisition is likely to have an impact on Symantec, as it is McAfee's most direct competitor, Contu said.

"We'll see how it shakes out," Contu said.

The deal brings Intel a wealth of security technologies, such as encryption, data loss prevention and Web messaging, said Chris Christiansen, program vice president for analyst IDC. McAfee has a large network security business, and its engineers will now have access to Intel's manufacturing processes, advanced engineering capabilities and chip designs.

The premium price paid by Intel for McAfee indicates there may have been a bidding war, which is likely to spark a frenzy of acquisitions from other players such as Oracle and IBM, Christiansen said.

"I can't imagine that the unsuccessful bidders will simply just go away," he said.

(Marc Ferranti in New York contributed to this report.)

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags business issuesintelmcafeetakeovermergers & acquistions

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jeremy Kirk

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?