Advent, Permira-Led Group Taking McAfee Private in $14 Billion Acquisition

An investor group led by Advent International and Permira Advisers is taking McAfee private in a $14 billion acquisition.

The group also includes Crosspoint Capital Partners, CPP Investments, GIC and a subsidiary of the Abu Dhabi Investment Authority.

The Advent-and Permira-led group will acquire all outstanding shares of McAfee common stock for $26 per share in an all-cash deal.

The transaction should close in the first half of 2022, subject to customary closing conditions. Upon closing, you will no longer find McAfee stock on any public securities exchange.

Also on Monday, McAfee announced its third-quarter 2021 earnings. Net revenue was $491 million, reflecting 24% year-over-year growth. Profit was $2.4 million.

Peter Leav is McAfee’s president and CEO.

McAfee’s Peter Leav

“This transaction is a testament to McAfee’s market-leading online protection solutions, our talented employees, and outstanding customers and partners,” he said. “We want to thank our employees for their continued hard work and commitment to McAfee. We are thrilled to be partnering with premier firms who truly understand the cybersecurity landscape and have a proven track record of success.”

Acquisition Not Surprising

Eric Parizo is principal analyst of Omdia’s cybersecurity operations intelligence service. He said the acquisition isn’t surprising.

Omdia’s Eric Parizo

“Since Peter Leav became CEO, the entire goal has been to sell the company,” he said.

It proved too difficult to sell McAfee’s enterprise and consumer divisions together, Parizo said. Therefore, McAfee sold its enterprise division separately. It’s now merging with FireEye’s enterprise division.

The only surprise is the “alleged price tag,” he said.

“I struggle to see how the company could possibly be worth as much as $14 billion,” Parizo said. “The consumer division continues to be profitable, but it is largely lacking the identity protection engine that NortonLifeLock is using to drive new revenue at minimal cost. The buyer must believe there is not only a great deal of untapped revenue potential in McAfee, but that the company and the brand (now in the post-John McAfee era) is greatly undervalued.”

The opportunity will no doubt be to expand into all sorts of areas, Parizo said. That includes identity protection, home security, device firmware security and more.

“An intent to make McAfee the No. 1 global brand for consumer security, and the heavy investments of cash to make it happen, would be the only way a deal of this magnitude can pay off,” he said.

History with Intel

Intel bought McAfee in 2011. Private equity firm TPG Capital then took a 51% stake in the company. Intel and private equity firm Thoma Bravo held the remaining 49%.

McAfee went public a year ago, with TPG and Intel remaining as shareholders in the company.

A consortium led by Symphony Technology Group (STG) completed its acquisition of McAfee’s enterprise business in July. The group also bought FireEye’s products business, including the FireEye name, as well as RSA. STG has combined McAfee Enterprise and FireEye.

Bryan Taylor, an Advent managing partner, said McAfee is “one of the most trusted brands in the essential business of consumer digital protection.”

“We look forward to working alongside our investment partners and the talented McAfee team to continue setting the bar for consumer digital protection,” he said.

Tony Massimini is senior industry analyst for information and network security at Frost & Sullivan. He said NortonLifeLock is the market leader in consumer endpoint security while McAfee is a strong No. 2.

“That doesn’t change, McAfee is still going to be No. 2,” he said. “How they go forward with their go-to-market strategies remains to be seen.”

Moreover, this isn’t the first time a company has gone public, and then is purchased by an investment firm and taken private again, Massimini said.

“We don’t know at this point what their future plans are,” he said. “Do they continue to operate McAfee as a separate firm, or try to do a merger like STG. With all of these companies spinning off their enterprise and consumer businesses, it’s going to make for a very interesting 2022 in the cybersecurity landscape.”