Intel Corp. (INTC) has agreed to pay $7.68 billion to acquire
computer-security software maker McAfee Inc. (MFE) as the chip
giant sees McAfee's products as key to the chip giant's own online
and wireless computing efforts.
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.
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.
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.
"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 anti-virus 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 (TXN) 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.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com