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Intel Buys McAfee

The acquisition, part of Intel's mobile wireless strategy, gives McAfee a whopping 60% premium

In a surprise move Intel is buying McAfee for $7.68 billion, a whopping 60% premium that will be slightly dilutive initially for the semiconductor giant.

Intel explained Thursday morning that that the acquisition, part of its mobile wireless strategy, would let it combine security software and hardware as billions of still relatively unprotected devices – and the server and cloud networks that manage them – go online.

It would put security “on a par with energy-efficient performance and connectivity.” Its vision includes TVs, cars, medical devices and ATM machines and it noted that cyber threats are on the rise.

It said a “fundamentally new approach” was needed and promised that hardware-enhanced security would lead to breakthroughs in countering increasingly sophisticated threats.

It was immediately seen as a reach for inorganic growth with better margins that’s less bumpy than chips. McAfee does close to $2 billion a year, has seen double-digit growth recently and fetched close to an 80% gross margin last year.

The deal will cost Intel $48 a share in cash.

Intel will run McAfee as a wholly owned subsidiary reporting to Intel’s Software and Services Group under Renée James.

McAfee has 6,100 people. Aside from its antivirus widgetry, its wares include end-point and networking products and services and an expanding line of gear targeting mobile devices such as smartphones, a market that’s been eluding Intel.

McAfee has been frequently cited as acquisition bait but never in association with Intel.

Intel said the acquisition would dilute its earnings slightly the first year and be flat the second year on a GAAP basis.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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