Chipmaker Intel Corp. on Thursday agreed to purchase security software giant McAfee Inc. for $7.68 billion, in the biggest Silicon Valley tie-up of the year.
In Intel’s biggest acquisition in its history, it will pay current McAfee shareholders $48 per share in cash, a 60 percent premium over Wednesday night’s closing price of $29.93.
The purchase instantly propels Intel to the No. 2 spot in security software, trailing only industry leader Symantec Inc. It is the biggest leap into the software space the traditional hardware manufacturer has made in its 42-year history.
With security increasingly playing a bigger role in business and consumer technology, Intel may look to incorporating security feature directly in the chips it markets, which could give the company an advantage against rivals such as Advanced Micro Devices Inc.
McAfee markets consumer-targeted security and antivirus products as well as corporate services.
“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,” Intel CEO Paul S. Otellini said in a statement on Thursday. “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 has recently been boosted by brisk PC sales in the first half of 2010, posting record-setting revenues and profits. For the quarter ended June 26, Intel reported $10.8 billion in revenues and $2.9 billion in net income.
“The sale of McAfee represents the continuing consolidation of the software sector which we expect to continue,” Barclays Capital analyst Israel Hernandez wrote in a research note. “We believe conditions for M&A in our space are ripening given the strong balance sheets and cash positions at potential acquirers and attractive valuations among potential sellers.”
The deal could also put pressure on rivals Symantec and Check Point Software Technologies Ltd. to find hardware partners.
Both boards of directors have approved the deal. The merger still requires McAfee’s shareholder as well as regulatory approvals.
In Intel’s biggest acquisition in its history, it will pay current McAfee shareholders $48 per share in cash, a 60 percent premium over Wednesday night’s closing price of $29.93.
The purchase instantly propels Intel to the No. 2 spot in security software, trailing only industry leader Symantec Inc. It is the biggest leap into the software space the traditional hardware manufacturer has made in its 42-year history.
With security increasingly playing a bigger role in business and consumer technology, Intel may look to incorporating security feature directly in the chips it markets, which could give the company an advantage against rivals such as Advanced Micro Devices Inc.
McAfee markets consumer-targeted security and antivirus products as well as corporate services.
“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,” Intel CEO Paul S. Otellini said in a statement on Thursday. “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 has recently been boosted by brisk PC sales in the first half of 2010, posting record-setting revenues and profits. For the quarter ended June 26, Intel reported $10.8 billion in revenues and $2.9 billion in net income.
“The sale of McAfee represents the continuing consolidation of the software sector which we expect to continue,” Barclays Capital analyst Israel Hernandez wrote in a research note. “We believe conditions for M&A in our space are ripening given the strong balance sheets and cash positions at potential acquirers and attractive valuations among potential sellers.”
The deal could also put pressure on rivals Symantec and Check Point Software Technologies Ltd. to find hardware partners.
Both boards of directors have approved the deal. The merger still requires McAfee’s shareholder as well as regulatory approvals.
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