And they want to deliver this type of capability across the board, from handsets and notebooks all the way up to severs across the cloud,” said Patrick Wang, an analyst with Wedbush Securities.įor the moment, the biggest advantage in the McAfee deal may be Intel’s ability to sell McAfee’s software to PC customers. Intel would like “to provide some sort of hardware acceleration for virus scans, or spyware scans. Īnalysts say Intel could differentiate its processors by, for instance, designing processors that speed up the security scans typically performed by McAfee software, or creating creating technology that makes gadgets less vulnerable to attacks by hackers. But as consumers increasingly use handheld gadgets such as smartphones and Apple Inc's AAPL.O iPad to connect to the Internet, Intel's offerings are at a disadvantage against more power-efficient chips from rivals such as Qualcomm Inc QCOM.O and Texas Instruments Inc TXN.N. Intel dominates the market for PC microprocessors. Analysts and executives said the premium was in line with valuations on recent software deals.Ī source close to the deal said the acquisition implied an 18-19 times forward price-earnings multiple, compared with a typical valuation in the high 20s to low 30s. Intel will pay $48 per share in cash - an eye-popping 60 percent premium to McAfee’s closing price on Wednesday. Deals worth nearly $90 billion have been announced this week alone, making it the busiest week in an August since 2006, according to Thomson Reuters data. Intel’s deal adds to an unusually active August for M&A. The agreement is the latest in a stream of technology deals, including Dell Inc's DELL.O $1.3 billion pact to purchase storage company 3PAR Inc PAR.N. “By being able to differentiate with a security offering, they may well have an edge over the competition.”
Intel clearly wants to participate in that market,” said Chris Hickey, an analyst with Atlantic Equities. “When we look several years out, almost every device in the home is likely to be connected to the Internet. The shares of Symantec Corp SYMC.O, the biggest security company, rose 6.2 percent. Intel shares closed 3.5 percent down, while McAfee shares surged 57.1 percent and helped boost the wider security sector. Swallowing McAfee would also give Intel the ability to sell high-profit security software alongside its microprocessors to its traditional PC customers. It underscores how security has become a concern in a world of Web-enabled devices. SAN FRANCISCO/NEW YORK, Aug 19 (Reuters) - Intel Corp INTC.O will pay $7.7 billion for security software maker McAfee Inc MFE.N, making its largest-ever acquisition to bolster the appeal of its chips as it tries to expand from PCs into the burgeoning market for Web-connected gadgets.Īnalysts say the deal, the latest in a flurry of high-premium acquisitions, could give the world’s largest chip maker a leg up as it competes against a growing field of rivals designing technology to power smartphones, tablet PCs and newfangled televisions. * Intel shares down 3.5 pct (Recasts adds deal volume, options trade, links, comments) * Latest in a steady stream of technology deals
* Intel seeks to boost security offerings * Deal worth $48 per McAfee share, a 60 percent premium