Intel to Spin McAfee Back Out as Independent Cybersecurity Company

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in May-June 2016.**

Five years after acquiring McAfee for some $7.6 billion and rechristening it Intel Security, Intel Corp. announced on Wednesday an agreement with global alternative asset and private equity firm TPG to jointly spin out Intel Security in a transaction valuing the business at $4.2 billion. TPG is making a $1.1 billion equity investment. Intel will receive $3.1 billion in cash and retain a 49 percent stake.

The company will revert back to the McAfee moniker. Channel-partner readers may recognize TPG as the recent buyer of RCN Telecom Services and Grande Communications Networks.

An Intel spokesman told Channel Partners that the existing management team will remain, including channel leaders. Intel SVP and Intel Security general manager Chris Young will lead McAfee following the transaction close; Young published an open letter in which he addressed partners, promising to “continue to stand behind you, alongside our joint customers, in delivering solutions across the entirety of the threat defense life cycle.”

Young went on to reiterate that the company’s commitment to partners will not falter, a statement that rings true given the partner-centric focus of competitors Kaspersky, Symantec and Sophos.

The reasoning behind the 2011 acquisition – baking security into Intel silicon – has failed to pan out as expected. Despite a strong channel focus, slumping PC sales impacted both the chip strategy and sales of McAfee’s endpoint security software.

Intel earlier this year closed a deal selling the McAfee Next Generation Firewall and McAfee Firewall Enterprise to Forcepoint. That move was part of a revamped strategy to focus on a platform approach covering endpoints and cloud. Richard Steranka, VP of Intel Security’s global channel operations, told Channel Partners in May that the company was well into that transition.

“It’s not here today, per se, in all elements, all aspects,” said Steranka. “The end vision hasn’t been realized. We’re probably 18 to 24 months away.”

Position of Strength

Intel Security serves 62 percent of the Global 2000 and announced a record quarter in Q1 2016 across all regions and units. Web, server and data-protection sales were up around 30 percent each, while sales of advanced threat-detection technology jumped more than 200 percent. Currently, the company’s software protects more than …

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… 250 million endpoints and detects more than 400,000 new threats each day. It employs some 7,500.

Through the first half of this year, security-group revenue grew 11 percent, to $1.1 billion. Still, Intel Corp. has reportedly been shopping the business for several months.

“Security remains important in everything we do at Intel, and going forward we will continue to integrate industry-leading security and privacy capabilities in our products from the cloud to billions of smart, connected computing devices,” said Brian Krzanich, CEO of Intel, in a statement. “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, creating long-term value for McAfee’s customers, partners, employees and Intel’s shareholders.”

The transaction is expected to close in the second quarter of 2017, subject to regulatory approval.

Follow editor in chief @LornaGarey on Twitter.