infoTECH Feature

September 09, 2016

Intel to Spin off McAffee in $4.2B Deal with TPG

Sometimes things just don’t work out as planned. Such is the case with Intel’s (News - Alert) acquisition of the cybersecurity unit of McAffee. So, just six years after plowing $7.6 billion into this investment, Intel is spinning it off.

In exchange for handing over 51 percent majority in the business to private equity firm TPG, Intel will receive $3.1 billion. TPG will invest an additional $1.1 billion in the business (in which Intel will own the other 49 percent), bringing the total deal to $4.2 billion.

“Security remains important in everything we do at Intel and going forward we will continue to integrate industry-leading security and privacy capabilities in our products from the cloud to billions of smart, connected computing devices,” said Brian Krzanich, CEO of Intel. “As we collaborate with TPG to establish McAfee (News - Alert) as an independent company, we will also share in the future success of the business and in the market demand for top-flight security solutions, creating long-term value for McAfee’s customers, partners, employees and Intel’s shareholders. Intel will continue our collaboration with McAfee as we offer safe and secure products to our customers.”

The new company will be known as McAffee. Chris Young, who is currently senior vice president and general manager at Intel Security (News - Alert) Group, will take over as CEO of the new company following the close of the deal.

While revenue for Intel Security was up 11 percent year over year for the first half of 2016, according to Business Insider, combining McAffee and Intel was probably not a great idea in the first place given the two companies have very different models and processes, and in light of the fact that Intel effectively halved the value of the company since it bought it.

John McAffee, the founder of the security company, recently told Business Insider: "I never understood why a chip manufacturer would have purchased a suite of software security products in the first place. The product development and maintenance processes are radically different, as are the marketing and sales processes. And there is virtually no customer overlap."




Edited by Stefania Viscusi
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