Intel set to acquire McAfee

By Prince Osuagwu

Intel Corporation has entered into a definitive agreement to acquire one of the world’s largest dedicated security technology companies, McAfee, Inc.,  through the purchase of all of the company’s common stock at $48 per share in cash, for approximately $7.68 billion.

McAfee as a company committed to relentlessly tackling world’s toughest security challenges, delivers proactive and proven solutions and services that help secure systems and networks around the world, allowing users to safely connect to the Internet, browse, and shop the web more securely.

Hi-Tech gathered that 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 going by the fact that today’s security approach does not fully address the billions of new Internet-ready devices, 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.

Intel, seems to be elevating 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.

Intel president and CEO, Paul Otellini, said that “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. 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.

Intel believes that hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow, adding that the acquisition was consistent with its software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility.

Meanwhile, President and CEO of McAfee,  Dave DeWalt, said that “the cyber threat landscape has changed dramatically over the past few years, with millions of new threats appearing every month. 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.

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.