New York — Chip maker Intel Corp., after 18 months of close collaboration with security software provider McAfee Inc., Intel finally announced that it would acquire McAfee for $7.68 billion to address the growing threat of hacking and viruses in an all-cash deal, or $48 per share.
By far the largest acquisition made by the world’s largest chip maker in its 47-year history; Chipzilla agreed to acquire all of McAfee’s common stock at a price of $48 per share, resulting in the firm becoming a wholly owned subsidiary of Intel, reporting to its Software and Services Group. Intel claimed that the deal will “ultimately better protect customers” as their devices connect to the Internet.
Not having traded at that level since 1999, the per share price represents a 60% premium over the value of Mc-Afee shares of $29.93 as of market closure on last week. McAfee shares jumped 58 percent after the deal was made public to $47.42 in pre-market trading, while Intel shares dipped 2.5 percent to $19.11, according to reports.
Intel said that security is becoming increasingly vital as new devices such as televisions, cars and medical devices go online. Intel CEO Paul Otellini said that the deal was the largest in the company’s 42 year history, but “brings us extremely talented community 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.”
Renee James, general manager of Intel’s software and services group, who will oversee the McAfee team as a wholly owned subsidiary, said the philosophy behind the move is to make Intel’s silicon-based products directly embedded with security features.
“Hardware-enhanced security would steer us to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow,” she said in a release. “McAfee is the next step in this strategy, and the right security partner for us.”
Intel’s officials told that the boards of both companies have unanimously sanctioned the deal and it expects it to close once it gains McAfee shareholder approval and regulatory clearance.
They also stated that acquisition of McAfee will help better incorporate security concerns into computers, mobile phones and cash machines. Intel said the deal “indicates that security is now a fundamental component of online computing.” Intel went on to say that security is now just as important to the company as energy efficiency and internet connectivity.
“With the fast paced development of growth across a vast array of internet-connected devices, more and more of the elements of our lives have moved online,” said Otellini.
“In the past, energy-efficient performance and connectivity have established computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences,” he added.
Both companies are located in Santa Clara, Calif. Founded in 1987, McAfee has some 6,100 employees, and reported $2 billion in 2009 revenue. With this acquisition Intel will gain from McAfee’s well-established position in the security environment, and McAfee may be able to optimize its notoriously performance-hungry software now that it is a part of the company that provides the CPUs to many computers.
McAfee CEO Dave DeWalt said, “We hope this acquisition will result in our ability to deliver a safer, more secure and trusted Internet-enabled device experience.”
Market analysts reported that the acquisition of McAfee shows the willingness of Intel to move from hardware to software and services. Intel recently declared its best quarter ever with $2.9 billion in profit, thanks to an influx of delayed computer purchases by businesses.