Intel in $7.68bn McAfee takeover
August 19, 2010
Intel will pay $7.68bn (£5bn) in cash.
Under the terms of the deal, Intel said it would pay $48 per share in cash for McAfee, almost 60% higher than its closing price on Wednesday.
Through buying McAfee, a leading security technology firm, Intel intends to build security features into its microprocessors which go into products such as laptops and phones.
The two companies said they had been working together for 18 months and that, should the takeover pass regulatory and shareholder approval, the first new products would be revealed early next year.
Intel has recognised that online security is not just about a few hacked bank accounts, stolen company secrets or a lone PC kept virus-free.
These days the internet reaches nearly everywhere: from smartphones to the power grid, your television to the transport system. Online threats now pose a systemic risk.
Microsoft recently launched its own suite of "Security Essentials" to keep computers safe. Apple says it has built security into its very system. Intel’s deal with McAfee is yet another attempt to ensure that consumers don’t lose trust in our interconnected world.
But Intel will take it one step further. The McAfee deal will see the integration of security into hardware, into the chips powering much of our computer-driven world. It also bolsters Intel’s attempts to become more than a chip maker as it develops its own consumer devices and offering of IT services.
Both boards of directors have unanimously approved the deal.
However, the announcement took many analysts by surprise and sent McAfee’s shares 58% higher to $47.17, close to the proposed purchase price.
Intel shares, meanwhile, fell by 3.2% to $18.97.
Mobile growth
Tim Danton, editor of PC Pro magazine, said the announcement came out of the blue.
"Intel does buy a lot of companies and it does have a lot of more cash than anyone else out there. So it making a big acquisition isn’t a surprise, but you may have thought it more likely to buy another hardware firm," he told the BBC.
"No doubt Intel is looking ahead and seeing that the laptop and desktop market are probably past their heyday and the big growth area is mobile.
"For a company like Intel, it’s nowhere near as strong in the mobile area as it is in the laptop and desktop areas, so it’s probably looking for new ways to get streams and revenues in the future."
But he added: "Perhaps that is Intel’s point of view but not everybody else’s. The reaction from investors has been quite negative."