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Intel Sells Majority Stake in Computer Security Unit to TPG

Financial Information
  • Transaction Value                                    $4.2 Billion
Transaction Facts
  • Intel (Nasdaq: INTC) and private equity firm TPG announced yesterday an agreement to sell 51 percent of Intel Security to TPG, in exchange for $3.1 billion in cash.
  • Intel will retain a 49 percent stake in the new company, which is to be called McAfee and will be one of the largest pure-play cybersecurity companies.
  • As part of the transaction, TPG is making a $1.1 billion equity investment in McAfee to facilitate future growth.

Confronting Headwinds With Increased Focus

  • Five Long Years: Intel originally bought McAfee in 2011 for $7.7 billion, paying a 60 percent premium in anticipation of higher profits due to leveraging the company’s expertise to booster cybersecurity capabilities. However, the division’s performance historically underwhelmed, despite a recent uptick in revenue thanks to increasing global demand for cybersecurity solutions.
  • Shifting Market Means Shifting M&A Priorities: In the face of continually declining PC sales, Intel has sought to focus on new growth areas such as the Internet of Things and computers for data centers. It has done this in part through strategic acquisition – its $17 billion acquisition of fellow chipmaker Altera Corp in 2015 was its largest ever and contributed to a wave of consolidation reverberating across the semiconductor industry.
  • Cybersecurity as a Hot Space: Continued concern over hacking and data integrity has helped cybersecurity remain a hot sector, with both strategics and private equity firms looking to acquire new customers and capabilities. June saw Symantec acquire Blue Coat Systems for more than $6 billion, while Dell’s SecureWorks cybersecurity unit was the first IPO of 2016.
  • Benefits for Both: This deal promises upside potential on both sides of the transaction. Intel will be able to refocus resources and attention on its core business to better combat industry shifts like the increased prominence of mobile. TPG, which last year led investments in smaller internet security companies Zscaler and Tanium, gains a stable of corporate accounts and a more established cybersecurity platform.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.
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