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Intel to buy McAfee for $7.68 billion
plans to buy security company McAfee for $7.68 billion--the biggest acquisition
in its 42-year history.
chipmaker said Thursday it has entered into a definitive agreement to buy all of
McAfee's common stock at $48 per share in cash. McAfee's stock closed Wednesday
at $29.93, making Intel's offer a 60 percent premium.
boards of both companies have approved the deal.
Security has become an essential element of online computing, on par with
energy-efficient performance and connectivity, Intel said. But today's security
isn't adequately addressing the array of new Net-connected machines on the
market, such as mobile devices, TVs,cars, ATMs,
and medical gadgets, according to Intel. Offering protection requires a new
approach that can tie together software, hardware, and services, the company
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," Intel CEO Paul
Otellini said 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
integrating McAfee's core technology, Intel asserts that it can improve current
products and offer new ones that can better secure both the cloud and devices
used by consumers and businesses. Those include traditional computers and
embedded products--any device where chips play a prominent role.
view is that everywhere we sell a microprocessor, there is an opportunity to
sell security software with it," Otellini said in a conference call.
chipmaker also sees the acquisition as augmenting its wireless strategy.
security will lead to breakthroughs in effectively countering the increasingly
sophisticated threats of today and tomorrow," Renee James, Intel senior vice
president, said in a statement. "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
number of connected devices is expected to grow from around 1 billion today to
50 billion in another 10 years, according to McAfee CEO Dave DeWalt. This growth
will reshape opportunities in communications and commerce, he said in a video
presentation, but cybercriminals and cyberterrorists will also take advantage of
the Net's open architecture, putting users at risk and jeopardizing the future
of the Internet. Tackling next-generation cybersecurity is a key reason and
motivation for Intel and McAfee to join forces, DeWalt said.
merger stems in part from projects that Intel and McAfee have already been
working on together. The two companies have been collaborating for the past 18
months on ways to improve security, James noted in the conference
working alongside each other and recognizing that we share a common vision for
improving security, it made good sense that we take this step," James
first product resulting from the team-up will be released in early 2011, James
said, though she didn't reveal any details.
deal also continues Intel's strategy of growing its business by using software
to enhance its hardware, added James, citing the company's 2009 acquisition of
Wind River Systems as just one example.
deal is expected to close following McAfee shareholder approval and regulatory
clearances, which Intel is hoping will occur before year's end. Once the
acquisition is finalized, McAfee will operate as a wholly owned subsidiary, tied
to Intel's Software and Services Group.
noted the McAfee management team has promised to stay on for many years after
the acquisition closes. Intel also said it's committed to the McAfee brand and
all McAfee products.
initial trading Thursday, McAfee stock was surging toward Intel's offer price,
up about 57 percent to around $47.16, while Intel's own shares were trending
down about 3 percent to the vicinity of $18.90. Intel said it expects the
integration of McAfee to slightly dilute earnings during the first year of
combined operations due to merger-related costs but then have little effect in
the second year.
Intel is paying a 60 percent premium for McAfee over the stock's closing price
from Wednesday, Intel noted the premium is in the range of recent large software
and security transactions and is reasonable given McAfee's growth and
profitability and the added value that Intel and McAfee can create together.
Intel acquisition of McAfee illustrates the trend of security proliferating
through all the layers of technology, said IDC analyst Chris Christiansen.
think this is a dramatic acceleration in the previous trend of security going
from boxes to board to chips," he said. "Intel can bring economies of scale and
advanced chip management to McAfee, and McAfee has technology in messaging, Web,
encryption and DLP, areas that Intel can use in a variety of ways. It represents
a shift in the security market of security into systems, chip and storage
management and other disciplines."
news also makes Christiansen wonder whether Symantec might not be next as an
are going to see more and more security companies absorbed into system
management," he said, noting that "Microsoft consolidated security into its
system management division."
The McAfee acquisition fits nicely with Intel's purchase last year of
Wind River, McAfee Chief Technology Officer George Kurtz noted.
Intelboughtthe maker of embedded-systems software for
"Given the current challenges in dealing with the proliferation of
virulent malware, bringing software closer to silicon will provide a real
advantage for consumers and businesses. Beating back the tide of malware
proliferation by changing the game on the bad guys is an exciting proposition,"
Kurtz said in ablog post.
strategy of protecting the multitude of devices such as ATMs, printers, digital
copiers, and cars fits with helping organizations better manage and protect the
IP enabled mobile and embedded devices that run Wind River embedded and mobile
software," Kurtz said. "This also dovetails nicely with McAfee's acquisition of
Solidcore, a leader in dynamic whitelisting technology that already provides
protection for millions of embedded devices."