Update: Intel to buy McAfee for $7.68 billion
Chip maker says cash deal intended to beef up its mobile business (see video, below)
IDG News Service - Intel today agreed to acquire security vendor McAfee in a cash deal valued at about $7.68 billion, a move seen aimed at enhancing the chip maker's mobile strategy.
The boards of directors of both companies have approved the deal.
When it closes, McAfee is expected to become part of 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 Renee 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 $2 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.
- Learn More About Peer 1 Hosting's Mission Critical Cloud Mission Critical Cloud from Peer 1 Hosting is enterprise-ready, creating a perfect point of adoption whether you need an off-premise solution for development
- What Makes a Cloud Solution Truly Enterprise-Grade? Future enterprise cloud capabilities will evolve from five core elements...
- Securing Mobile App Data - Comparing Containers and App Wrappers Analysts agree that Mobile Device Management (MDM) is not enough when it comes to securing app data. Although it remains a critical component...
- PCI 3.0 Compliance In this white paper, learn how PCI-DSS 3.0 effects how you deploy and maintain PCI compliant networks using CradlePoint devices.
- Cloud and Collaboration: Driving Your Business Value Mission Critical Cloud from Peer 1 Hosting is enterprise-grade.
- Peer 1's Mission Critical Cloud: Your Cloud, Your Way Peer 1 Hosting's Mission Critical Cloud offers the ultimate in flexible customization of infrastructure, resources and support. All Security White Papers | Webcasts
Our new bimonthly Internet of Things newsletter helps you keep pace with the rapidly evolving technologies, trends and developments related to the IoT. Subscribe now and stay up to date!