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Intel to buy McAfee

Intel poised to acquire security vendor in $7.68bn deal

Pile of dollar bills

Intel Corporation (NASDAQ:INTC) is poised to acquire security vendor McAfee (NYSE:MFE) in a deal worth $7.68bn.

Both boards of directors have unanimously approved the deal which now needs to undergo shareholder approval and regulatory clearances. McAfee, which has enjoyed double-digit, year-over-year growth and nearly 80 percent gross margins last year, will become a wholly-owned subsidiary of Intel, reporting into Intel's Software and Services Group.

Third pillar

“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,” says Paul Otellini, Intel president and CEO. “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.”

In the conference call accompanying the announcement, when asked why Intel felt the need to acquire McAfee instead of just partnering? Otellini responded that having a deeper collaboration of highly integrated hardware and software would add value and differentiation to its platforms “it made sense to have that value accrued to Intel shareholders,” he comments.

Otellini also adds that, “Everywhere we sell a microprocessor there is a security sell it will be deeply integrated into our architecture.”

Differentiator

Throughout the press conference Otellini and the Intel team made reference to the huge potential for security in embedded devices like televisions and motor vehicles, highlighting the purchase of McAfee as a “key differentiator”

Intel stressed that it would work with other security vendors and that would “not have a McAfee only strategy”. The firm also hinted at new embedded products as a result of the acquisition starting to appear in early of 2011.

McAfee, based in Santa Clara and founded in 1987, is the world's largest dedicated security technology company with approximately $2 billion in revenue in 2009. With approximately 6,100 employees, McAfee's products and technologies deliver secure solutions and services to consumers, enterprises and governments around the world and include a strong sales force that works with a variety of customers.

In the UK, McAfee has around 1200 channel partners and several distribution partners including Computer 2000Ingram Micro and Arrow ECS.

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