Global private equity firm TPG agreed to pay $1.1 billion to acquire a 51 percent stake in cybersecurity company McAfee, while Intel Corp. (NASDAQ: INTC) will keep a 49 percent interest in a newly formed, jointly-owned spinoff of Intel Security. The independent McAfee business is valued at $4.2 billion, based on an equity value of $2.2 billion plus $2 billion in debt.
The debt initially will be financed by Intel until completion of audited financial statements for McAfee, expected within three to five months of close. The deal is expected to close in the second quarter of 2017, subject to regulatory approvals and customary closing conditions.
Earlier this year ExitHub reported that Intel Corp. was seeking an exit strategy for Intel Security, the antivirus software maker formerly known as McAfee, which Intel acquired for nearly $7.7 billion in February 2011.
The move comes two months after CVC Capital-backed Avast Software agreed to acquire rival AVG Technologies NV (NYSE: AVG) for $1.3 billion in cash. Global private equity firm CVC acquired a major stake in Avast from its founders and growth equity firm Summit Partners in a $1 billion deal in 2014.
In June, cybersecurity rival Symantec (NASDAQ: SYMC) agreed to acquire Blue Coat Inc., the #1 market share leader in web security, for $4.65 billion from private equity firms Silver Lake and Bain Capital, as reported by ExitHub.
“As we collaborate with TPG to establish McAfee 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,” said Brian Krzanich, CEO of Intel.
Chris Young, Intel Security general manager and SVP of Intel Corp. will be appointed CEO of the new company upon closing of the transaction.
“We believe that McAfee will thrive as an independent company. With TPG’s investment, along with continued support from Intel, McAfee will sharpen its focus and become even more agile in its response to today’s rapidly evolving security sector,” said Jim Coulter, co-founder and co-CEO of TPG.
TPG is a leading global alternative asset firm founded in 1992 with over $70 billion of assets under management and offices in Austin, Beijing, Dallas, Fort Worth, Hong Kong, Houston, Istanbul, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San Francisco, São Paulo, Singapore, and Tokyo. TPG’s investment platforms are across a wide range of asset classes, including private equity, growth venture, real estate, credit, and public equity.
Through the first half of this year, Intel Security Group revenue grew 11 percent to $1.1 billion, while operating income grew 391 percent to $182 million. Intel Security also increased total bookings 7 percent per year on a constant currency basis from 2013 to 2015.
In May, Intel’s venture capital arm, Intel Capital, was said to have engaged UBS Group AG (NYSE: UBS) to explore the sale of nearly a quarter of its portfolio companies, in a deal valued at $1 billion. “As part of my review of the Intel Capital business, I have commissioned a review of our portfolio,” said Intel Capital president, Wendell Brooks, in May. Intel Capital later appears to have changed its plans.
In November 2015. Intel Security confirmed the divestiture of its McAfee Next-Generation Firewall and McAfee Firewall Enterprise businesses, which were acquired by Raytheon|Websense for an undisclosed amount. The sale was part of a new strategy by Intel Security, unveiled last October at its Focus 15 event in Las Vegas.
In October 2015, the Santa Clara, Calif.-based security vendor revealed that multiple products have either been sold to other vendors or are being eliminated, according to CRN. Around the same time, Intel Security also announced the end of life of McAfee Asset Manager, McAfee Email Security Solutions (including McAfee Email Gateway, McAfee SaaS Email Protection and Continuity, McAfee SaaS Email Encryption, and McAfee SaaS Email Archiving), McAfee Enterprise Mobility Manager, McAfee Network Threat Response, McAfee SaaS Endpoint Protection, and McAfee Vulnerability Manager and Total Protection For Compliance Desktop.
In January 2014, Intel attempted to distance itself from the name of its top security product, McAfee, rebranding its subsidiary as Intel Security “after years of having its name dragged through the mud thanks to the misadventures of its founder, John McAfee,” CNN Money commented.
Nearly six years after acquiring McAfee, Intel has not yet completed its original plan “to embed its cyber security functionality on to chips, promising the ability to detect threats at a deeper level” The FT said. “David DeWalt, the chief executive who helped engineer the sale, left to lead FireEye, a next generation security company and his replacement, Mike DeCesare, left in 2014 and now runs another security company called ForeScout. Intel Security is led by Chris Young, a former Cisco senior vice-president,” it added.
“Intel has been restructuring its business after it was hit by the declining PC market, announcing plans this year to cut 12,000 jobs in its largest workforce reduction in a decade,” said FT reporters Hanna Kuchler and James Fontanella-Khan. “The company is trying to refocus around selling chips for cloud computing rather than PCs, which still contribute 60 per cent of sales and 40 per cent of profits.”
Antivirus Product Market Share
The above comparison chart only includes data from products with real time protection (RTP) enabled. According to OPSWAT, a San Francisco based software company that provides solutions to secure and manage IT infrastructure, based on data collected on January 2, 2015, Microsoft and Avast are the dominant vendors in its antivirus market share report, despite the exclusion of Microsoft’s Windows Defender, which is an optional built-in feature in Windows 10, and a feature of Windows 8 and 8.1 and “not actively acquired” by the user.
All other vendors (including McAfee VirusScan with a 3.6% market share, and its Enterprise version with a 2.2% share) show a single-digit market share, including Avira Free Antivirus, AVG Anti-Virus Free Edition, McAfee VirusScan, and Symantec Endpoint Protection. When combined, products that did not make the top ten in the rankings still make up a sizable 35% share of the market. OPSWAT is not a research institution and makes no claims on the accuracy of this data in the real world marketplace.