Intel to buy McAfee for $7.68 bn

Intel Corp agreed to buy McAfee Inc for $7.68 billion, its biggest-ever acquisition, adding security software to its chipmaking arsenal.

McAfee investors will receive $48 a share in cash, Santa Clara, California-based Intel, the world’s largest chipmaker, said in a statement today. That’s 60 per cent more than McAfee’s closing price yesterday. Both boards have unanimously approved the deal, Intel said.

The acquisition of McAfee, which trails Symantec Corp in security software, will give Intel an advantage over other chip companies that must use outside security programs, said Hans Mosesmann, an analyst at Raymond James Associates in St Petersburg, Florida. The deal also helps Intel expand beyond PCs as Chief Executive Officer Paul Otellini is trying to break into mobile handsets and grow in other portable devices.

“Their ability to be successful in the non-PC market, and even in the PC market, is going to depend more on system solutions, and security is becoming a really big deal,” said Mosesmann. “The security threats that are out there are not going away — you could argue that they are going to get worse — and having a tightly coupled hardware and software is a strategic advantage.”

While Intel’s chips run more than 80 per cent of personal computers, they aren’t in any mobile phones now on the market.

Faster systems
Integrating McAfee into its hardware may make Intel’s systems operate faster or with longer battery life, said Mosesmann, who doesn’t own the shares and rates Intel “outperform”.

McAfee, also based in Santa Clara, rose as much as $18.37, or 61 per cent, to $48.30 in trading before US exchanges opened, after closing at $29.93 on the New York Stock Exchange yesterday. The shares had lost 26 per cent this year before today. Symantec climbed as much as $2.45, or 19 per cent, to $15.04 in early trading, while Intel shares declined as much as 61 cents, or 3.1 per cent, to $18.98.

Intel was advised by Goldman Sachs Group and Morrison & Foerster. McAfee’s advisers were Morgan Stanley and Wilson Sonsini Goodrich & Rosati.