By Calvin Biesecker
Computer chip maker Intel Corp. [INTC] yesterday said it has agreed to acquire the software and network security firm McAfee, Inc. [MFE] for $7.7 billion in a deal that that elevates security as an integral component of Intel’s focus.
In its press release announcing the pending deal, Intel said the purchase “enables a combination of security software and hardware from one company to ultimately better protect consumers, corporations and governments as billions of devices–and the server and cloud networks that manage them–go online.”
“This line says it all really,” Hardware 2.0 blogger Adrian Kingsley-Hughes said in a posting about deal. “Bottom line. ‘Intel inside, protected by Intel.’ Bold move and one that gives the chip giant a massive advantage (at least a perceived one) over AMD.” Advanced Micro Devices [AMD] is a rival to Intel in the market for computer chips.
For Intel, which sees its growth tied to the proliferation of mobile and embedded computing devices and consumer electronics, security will have to be an integral part of many of these because they will be connected to the Internet, Renee James, senior vice president for Intel’s Software and Services Group, said in a YouTube video posted on the company’s web site.
“So we think the technology of McAfee is applicable across all of the segments that we serve,” James said.
Dave DeWalt, president and CEO of McAfee, said in a statement that “The cyber threat landscape has changed dramatically over the past few years, with millions of new threats appearing every month. We believe this acquisition will result in our ability to deliver a safer, more secure and trusted Internet-enabled device experience.”
He added in a post on his own blog that the pending acquisition represents a “paradigm shift” for cybersecurity.
“The current cybersecurity model isn’t extensible across the proliferating spectrum of devices–providing protection to a heterogeneous world of connected devices requires a fundamentally new approach to security,” DeWalt said.
McAfee’s chief rival is Symantec Corp. [SYMC].
Larry Clinton, president of the Internet Security Alliance, told Defense Daily that the pending acquisition shows that there is “increasing recognition of the need to focus on cyber security as a critical element of corporate investment.” He anticipates further deals and investments in products that enhance cybersecurity.
Another industry official labeled the deal “unsurprising” because cybersecurity is “more and more becoming a marquis issue.” The official added that “everyone is looking to make their products more secure” and that doing so also becomes a marketing highlight, particularly with the federal government.
James Lewis, director of the Technology and Public Policy Program at the Center for Strategic and International Studies, told Defense Daily that Hewlett- Packard [HPQ] had been considered the front runner for McAfee until the computer and printer maker got sidetracked with the sexual harassment investigation of its now former CEO. He added that Intel may have zeroed in more closely on computing security when Google [GOOG] disclosed earlier this year that its corporate network had been hacked.
Clinton also found it interesting that Intel made a point of referencing the security of mobile devices. Commerce Secretary Gary Locke said recently that attention needs to be paid to on developing automated standards to secure smart phones, which are becoming ubiquitous in the hands of the general population in addition to business consumers.
As the market explodes with these devices, dangers exist in access points to the network so there is a need for new security products and standards, Clinton said.
The $48 per share price being paid by Intel values McAfee at a 60 percent premium to the closing price of the company’s stock on Wednesday. McAfee’s stock price closed yesterday at $47.01, up 57 percent. Symantec’s shares also got a boost from the announcement as its stock was up 6 percent to close at $13.37.
The deal has been approved by both companies’ boards of directors but still requires approval by McAfee shareholders and government regulators. Goldman Sachs was Intel’s financial adviser and McAfee was advised by Morgan Stanley.
If the deal is approved, McAfee will become a subsidiary of Intel. McAfee’s senior managers will remain with the company.