Intel Corporation to Acquire McAfee

[btarunr]

Intel Corporation has entered into a definitive agreement to acquire McAfee, Inc., through the purchase of all of the company's common stock at $48 per share in cash, for approximately $7.68 billion. Both boards of directors have unanimously approved the deal, which is expected to close after McAfee shareholder approval, regulatory clearances and other customary conditions specified in the agreement.

The acquisition reflects that security is now a fundamental component of online computing. Today's security approach does not fully address the billions of new Internet-ready devices connecting, including mobile and wireless devices, TVs, cars, medical devices and ATM machines as well as the accompanying surge in cyber threats. Providing protection to a diverse online world requires a fundamentally new approach involving software, hardware and services.

Inside Intel, the company has elevated the priority of security to be on par with its strategic focus areas in energy-efficient performance and Internet connectivity.

McAfee, which has enjoyed double-digit, year-over-year growth and nearly 80 percent gross margins last year, will become a wholly-owned subsidiary of Intel, reporting into Intel's Software and Services Group. The group is managed by Renée James, Intel senior vice president, and general manager of the group.

"With the rapid expansion of growth across a vast array of Internet-connected devices, more and more of the elements of our lives have moved online," said Paul Otellini, Intel president and CEO. "In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.

"The addition of McAfee products and technologies into the Intel computing portfolio brings us incredibly talented people with a track record of delivering security innovations, products and services that the industry and consumers trust to make connecting to the Internet safer and more secure," Otellini added.

"Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow," said James. "This acquisition is consistent with our software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility."

"McAfee is the next step in this strategy, and the right security partner for us," she added. "Our current work together has impressive prospects, and we look forward to introducing a product from our strategic partnership next year."

"The cyber threat landscape has changed dramatically over the past few years, with millions of new threats appearing every month," said Dave DeWalt, president and CEO of McAfee. "We believe this acquisition will result in our ability to deliver a safer, more secure and trusted Internet-enabled device experience."

McAfee, based in Santa Clara and founded in 1987, is the world's largest dedicated security technology company with approximately $2 billion in revenue in 2009. With approximately 6,100 employees, McAfee's products and technologies deliver secure solutions and services to consumers, enterprises and governments around the world and include a strong sales force that works with a variety of customers.

The company has a suite of software-related security solutions, including end-point and networking products and services that are focused on helping to ensure Internet-connected devices and networks are protected from malicious content, phony requests and unsecured transactions and communications. Among others, products include McAfee Total Protection?, McAfee Antivirus, McAfee Internet Security, McAfee Firewall, McAfee IPS as well as an expanding line of products targeting mobile devices such as smartphones.

Intel has made a series of recent and successful software acquisitions to pursue a deliberate strategy focused on leading companies in their industry delivering software that takes advantage of silicon. These include gaming, visual computing, embedded device and machine software and now security.

Home to two of the most innovative labs and research in the high-tech industry, Intel and McAfee will also jointly explore future product concepts to further strengthen security in the cloud network and myriad of computers and devices people use in their everyday lives.

On a GAAP basis, Intel expects the combination to be slightly dilutive to earnings in the first year of operations and approximately flat in the second year. On a non-GAAP basis, excluding a one-time write down of deferred revenue when the transaction closes and amortization of acquired intangibles, Intel expects the combination to be slightly accretive in the first year and improve beyond that.

Intel was advised by Goldman Sachs & Co. and Morrison & Foerster LLP. McAfee was advised by Morgan Stanley & Co. Inc. and Wilson Sonsini Goodrich & Rosati, P.C.

HIGHLIGHTS:

• Purchase of all of McAfee's common stock for $48 per share in cash, valuing the deal at approximately $7.68 billion. McAfee will operate as a wholly-owned subsidiary, reporting into Intel's Software and Services Group.
• Acquisition enables a combination of security software and hardware from one company to ultimately better protect consumers, corporations and governments as billions of devices - and the server and cloud networks that manage them - go online.
• Intel elevates focus on security on par with energy-efficient performance and connectivity. The acquisition augments Intel's mobile wireless strategy, helping to better assure customer and consumer security concerns as these billions of devices connect.
• Intel has made a number of software-related acquisitions of leaders in their respective industries that also rely on great silicon, including Wind River, Havok and now McAfee.

[983264]

Intel is going to make an anti-virus? Maybe it's a good idea, maybe not...

[FordGT90Concept]

Why would they want to do that? I mean, they can't integrate an antivirus like McAfee into a processor.

[hat]

[95Viper]

Originally Posted by FordGT90Concept

Why would they want to do that? I mean, they can't integrate an antivirus like McAfee into a processor.

IMO , they plan on just that thing.

[human_error]

Oh no - don't do it Intel - you've only bought McAfee 2010 - a new company called McAfee 2011 will be released in a couple of weeks which will cost you the same amount again :/

[btarunr]

Great idea. Enterprises will pay tons for an antivirus carrying the Intel brand name.

[DaJMasta]

Of all antivirus companies.... McAfee?

If you're going to be paying upwards of 7 billion, I'd at least chose a company with a good antivirus.

[phanbuey]

maybe they'll make McAfee not suck... big maybe though

[robn]

McAfee eats processor time, so Intel sells you a faster one. Simple plan!

[Completely Bonkers]

Otherwise, I don't get it. Intel has a stronger brand name IMO than McAfee - meaning - they should develop and sell their own product, not spend BILLIONS on existing code and customer base. Doesnt make sense to me... more like some out-of-deals investment bankers persuading some Intel executives to spend some money. Naiive. Intel share price will go down... not due to McAfee directly, but due to the board having run out of investment ideas that this is the best they can do.

[theubersmurf]

I can think of better things to spend 7.68b on. Intel, the next time you feel the need to throw out $7+b, send it to me.

[toastem2004]

perhaps instead of sitting on piles & piles & piles of cash, Intel could do some good. Instead of sending billions dollars to companies or "theubersmurf", perhaps intel could cut every household in America a check for $100. I liked this idea so much, I actually submitted it to them. It would be a better stimulus than the feds came up with, give them good PR and not cost em half of what the Mcafee acquisition set them back. Hell, i might even turn around and buy me a proc from them. As for the shareholders... buy another share or 2, for free.

[Delta6326]

all i have to say WASTE

[a_ump]

yea, i really don't know where this is gonna go besides them wanting an anti-virus possibly. I could see them simply acquiring mcafee for the user-base, re-working mcafee or simply writing their own anti-virus but with help from mcafee code and their programmers. Anti-virus is big bucks, but still....woulda figured for 7.68 billion they could've grabbed something else.

[Phxprovost]

Originally Posted by FordGT90Concept

Why would they want to do that?

only thing i can think of is it has something to do with intels entry into set top boxes and alot of providers like comcast and verizon use mcafee, so maybe its some kind of leverage for them to start using intel equipment + security for the boxes themselves.

Other then that i see no valid reason for Intel to pick up Mcafee of all things

[lism]

Big companies are buying other companies out.

Look at Google and microsoft, constant looking for new investments and make their marketshare and value, bigger.

But why the heck Mcafee. Its proberly the most family-scare-antivirus-package made together with norton.

[KainXS]

well its not like its worst than . . . . norton antivirus

[beyond_amusia]

If AMD buys Panda Intel is f*cked!

I think they are going to use it to develop a hardware based anti-malware app. think about it. instead of having software that sits in the background sucking cycles to monitor your other apps, you have a chip that specialized in identifying virus signatures. With a little non-volatile memory and access to the bus, it could update itself and do as good a job as a software solution without any impact on performance.

[Steevo]

Meh, now instead of buying a yearly virus update subscription you get to buy a new yearly CPU subscription, or else you get annoying popups?


64 bit OS with random writes and protected system operating area is already secure. Perhaps McAfee have identified a hardware vulnerability, perhaps Intel wants to just increase packaged marketshare, and try to monopolize another segment of the computer industry. Perhaps they failed so bad at graphics hardware they decided to go in the complete opposite direction.

[beyond_amusia]

Originally Posted by twilyth

I think they are going to use it to develop a hardware based anti-malware app. think about it. instead of having software that sits in the background sucking cycles to monitor your other apps, you have a chip that specialized in identifying virus signatures. With a little non-volatile memory and access to the bus, it could update itself and do as good a job as a software solution without any impact on performance.

But it would add latency at the least (it would likely sit 'between' the RAM and CPU) and wreck havoc on the poor soul whose app is falsely flagged as malware... Intel is good at one thing - CPUs. Okay, well, maybe NICs too, but wow, their 'GPUs' as just tragic...


EDIT: good point Steevo - Intel WOULD be devious enough to place said hardware on the CPU die, and somehow make software AV not work properly on that chip.

[FreedomEclipse]

Originally Posted by DaJMasta

Of all antivirus companies.... McAfee?

If you're going to be paying upwards of 7 billion, I'd at least chose a company with a good antivirus.

herehere, I cant agree more. My opinion of McAfee has never been that high to begin with, same goes for most of my lesser tech minded friends who buy poor value HP or CompaQ Pre-mades etc etc know to uninstall McAfee n put something half decent on such as norton 360v3 or 2010 (or 2011 - probably out soon since kaspersky has already got their 2011 kit out)

they should have partnerd up with Nod32 or someone else. Nod32 dont make half bad Anti-virus software.

---

the idea sounds good though. a hardware based Anti-virus/firewall. - great idea but going the wrong way about it.

we shall wait n see how this pans out

[Melvis]

And everyone thought it was weird for AMD to buy ATI

ATi was a bargin compared to McAfee

[Kitkat]

Originally Posted by btarunr

Great idea. Enterprises will pay tons for an antivirus carrying the Intel brand name.

Maybe But Macafee is useless Its too easy to make a antivirus now. Notice they are all apeshit low since things like MS esentials and other free anti virus companies. I havent used any of my free Keperskys (or whatever they are called) that came with my ROG boards. Its funny when something like free virus software TROUNCES big companies They have no choice and theyve been struggling for a while. The party is over all that "Extra Protection Super Editions" are bogus. All Anti Virus companies including the free ones get there info from the SAME place and work the SAME way at the core. Its really eyeopening.