[Infowarrior] - Intel to Buy McAfee in $7.68 Billion Deal

[Richard Forno]

Intel to Buy McAfee in $7.68 Billion Deal

By NATHAN BECKER

http://online.wsj.com/article/SB10001424052748704476104575439180665843938.html

Chip maker Intel Corp. agreed to pay $7.68 billion to acquire computer-security software maker McAfee Inc.

It will pay $48 for each share of McAfee, a 60% premium to Wednesday's closing price. The stock last traded at that level in 1999. Shares of McAfee jumped 58% to $47.40 premarket—they were down 28% the past year through Wednesday—while Intel declined 2% to $19.19.

In announcing the deal, Intel said current security doesn't fully address mobile, television, ATMs and other Internet-connected devices. McAfee will become part of Intel's software and services division.

"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," said Intel President and Chief Executive Paul Otellini. "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."

McAfee, best known for its widely popular antivirus software, has recently said it was marshaling more strength to go after the quickly developing mobile market, and it recently announced it was acquiring mobile-device security company tenCube, a move that follows its purchase of Trust Digital, another mobile-security-software firm.

Meanwhile, technology companies have been putting some of their bulging cash piles to work lately through acquisitions, suggesting they are taking advantage of low valuations to build their product and service offerings. On Monday, Intel said it would buy Texas Instruments Inc.'s cable-modem product line for an undisclosed amount.

The deals come as Intel last month reported its best-ever quarterly results amid an ongoing rebound in the semiconductor space. For its part, McAfee's second-quarter earnings rose 38%, allaying concerns about its business after a weak first quarter. The company said sales grew sharply in North America, one of its key markets.

Both boards of directors have unanimously approved the deal. The deal still requires McAfee shareholder approval and regulatory clearances.

Intel expects the deal to slightly cut into earnings the first year after closing because of merger-related charges and have little impact on the bottom line in the second year. A slight increase after those charges are seen in the first year.

Intel and McAfee are both based in Santa Clara,Calif.

Intel was advised on the deal by Goldman Sachs and Morrison & Foerster LLP. McAfee was advised by Morgan Stanley and Wilson Sonsini Goodrich & Rosati.

Write to Nathan Becker at nathan.becker at dowjones.com