Intel Buys McAfee In $7.68 Billion Blockbuster


Chip giant Intel on Thursday said it will acquire security software mainstay McAfee in a blockbuster deal valued at $7.68 billion in cash.

Under the terms of the deal, in which Intel will buy all of McAfee's common stock for $48 per share in cash, McAfee will operate as a wholly-owned Intel subsidiary and report into Intel's Software and Services Group.

Santa Clara, Calif.-based McAfee, which was founded in 1987, has become one of the world's largest security companies, covering a variety of market segements including consumers, enterprises and governments. In 2009, McAfee boasted roughly $2 billion in revenue.

The McAfee buy comes as Intel looks to broaden its security presence. Calling security a "fundamental component of online computing," Intel said that security as a whole currently lags and doesn't address the billions of new Internet-ready devices such as mobile and wireless devices, TVs, cars, medical devices and ATM machines. Intel said that protecting these devices from the ever-evolving landscape of threats requires a new approach to security that marries software, hardware and services. The McAfee buy, Intel said, will enable this approach.

According to Intel, the McAfee deal will help Intel create security software and hardware from a single company that better protects consumers, corporations and governments as billions of devices -- as well as the cloud and server infrastructure that they run on -- go online.

Along with boosting Santa Clara-based Intel's security software chops and helping it grow beyond its traditional PC and server markets, the McAfee acquisition also fuels Intel's growing mobility strategy.

For the past few years Intel has been bulking up its software offerings, acquiring various companies that leverage Intel's silicon offerings such as Wind River, which makes embedded device software, and Havok, maker of game development tools. McAfee plays perfectly into Intel's software plans, the company said, which include making security a top priority as it spreads its wings in the embedded device space. Combined, Intel and McAfee will look to strengthen security in the burgeoning cloud computing and mobile device markets.

"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," Paul Otellini, Intel president and CEO, 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 experiences."

Intel Senior Vice President and General Manager of its Software and Service Group Renee James said that the McAfee buy fits into Intel's strategy to lead with "hardware-enhanced security" to thwart current and future threats.

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