Intel to buy McAfee for €5.9bn

INTEL Corp has agreed to buy McAfee for $7.68 billion (€5.96bn), its largest acquisition, adding security software to its chipmaking arsenal.

McAfee investors will receive $48 a share in cash, Santa Clara, California-based Intel, the world’s largest chipmaker, said in a statement. That’s 60% more than McAfee’s closing price on Wednesday. Both boards have unanimously approved the deal, Intel said.

In May, McAfee announced plans to add 150 jobs in the coming years to the 120 unveiled at the opening of its EMEA headquarters in Mahon, Cork, bringing its workforce here to 280.

Cork is to roll out the cloud-based email and web security services MX Logic, McAfee’s newly acquired subsidiary in Colorado.

Buying McAfee, which trails Symantec Corp in security software, gives Intel a leg up on rivals that don’t provide computer protection, said Hans Mosesmann, an analyst at Raymond James Associates in St Petersburg, Florida. The deal may also help Intel chiefexecutive Paul Otellini in his drive to expand beyond PCs by breaking into mobile handsets and landing more chips in other mobile devices.

“Security is becoming a really big deal,” Mosesmann said. Adding McAfee may help Intel generate wider profit margins and crank out chips that help computers run more efficiently, analysts said. Intel expects a record 67% gross margin this quarter. McAfee reported a gross margin of 73.3% in its most recent period.

Integrating McAfee into its hardware may make Intel’s systems operate faster or boast longer battery life, said Mosesmann, who rates Intel to “outperform”. Software can run more quickly when it’s woven directly into a chip and doesn’t have to go through other programs. It’s also harder for hackers to circumvent.

Other companies are unlikely to compete with Intel’s offer because its “deep pockets” would help it outbid any rivals, Mosesmann said Intel has about $18bn in cash.

Symantec, based in Mountain View, California, may become a target to larger technology companies after Intel’s McAfee purchase, Cross Research analyst Rich Williams said. Symantec climbed as much as $1.38, or 11%, to $13.97 on the Nasdaq Stock Market yesterday, its largest gain since October.

Security software is becoming more valuable as an increasing number of devices adopt wireless technology that makes them vulnerable to hackers, said Williams.

He advises investors to buy McAfee and Symantec shares.

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