Vulnerabilities / Threats
8/19/2010
09:55 AM
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Intel To Buy Out McAfee For $7.68 Billion

The acquisition would allow Intel to offer a wide range of tightly bundled hardware and software security solutions.

Intel shook up the security landscape Thursday, announcing that it has agreed to acquire antivirus software maker McAfee for $48 per share, or $7.68 billion. The deal, if it passes regulatory muster, would enable the chipmaker to offer tightly integrated hardware and software security solutions for PCs, servers, and mobile devices.

Intel said it plans to operate McAfee as wholly-owned subsidiary within its Software and Services group. Company officials said the increase in threats that target online computing is a major reason behind the acquisition.

"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 Intel CEO Paul Otellini, in a statement.

"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," said Otellini.

The deal is sure to alter the competitive picture in the security industry, as it puts Intel into competition with Symantec and Microsoft—two vendors with which the chipmaker has previously partnered.

But Intel officials said they've come to believe that security software needs to be tightly coupled with processors for it to be truly effective against a growing range of viruses, malware, and spyware. "Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow," said Renee James, senior VP of Intel Software and Services, in a statement.

Those threats, while harmful to computer users, have helped McAfee increase its top and bottom lines in recent quarters as consumer and business spending on security software has grown in the face of mounting concerns over identity theft, piracy, and other types of cyberattacks. McAfee posted double-digit growth last year on margins of almost 80%.

McAfee executives said operating under Intel would allow their organization to offer more solutions for a broader array of platforms. "We believe this acquisition will result in our ability to deliver a safer, more secure and trusted Internet-enabled device experience," said McAfee CEO Dave DeWalt, in a statement.

Intel said it expects to take a slight hit to earnings in the first year of the deal. Shares of the company were were down 2.6%, to $19.08, in early trading Thursday. McAfee shares jumped 57%, to $47.21, on news of the deal. Symantec shares were up 6.75%, to $13.44, as investors speculated it may be the next security software vendor in line for a buyout.

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