Intel Trims Business, Sells Majority Stake in Security Unit

Intel is spinning off its McAfee cybersecurity unit in a deal worth $4.2 billion, just six years after acquiring the company for $7.6 billion.  Intel Corp INTC has finally completed the divestiture of its majority stake in Intel Security division to alternative asset fund manager TPG.  The newly spun-off unit has been renamed McAfee, with TPG holding 51 percent stake.

As previously announced, Intel and TPG valued the security division at $4.2 billion. Per the agreement, Intel received $3.1 billion in cash and retained 49 percent stake post the completion of the transaction.

Per an agreement with TPG, private equity firm Thoma Bravo also joined as a minority shareholder.  Moreover, TPG’s investment of almost $1.1 billion in the standalone business will boost McAfee’s capital base.

The negligible movement in Intel’s share price on April 5 reflected that the news was already factored in.  It is noted that the stock has underperformed the Zacks Semiconductor General industry in the last one year.  While Intel returned 14.8 percent, the industry gained 38.4 percent.

Intel acquired McAfee in 2010 and renamed it as Intel Security Group (ISG) in 2014.  In 2016, ISG reported revenues of $2.16 billion, up 8.8 percent over 2015.  However, the group contributed only 3.6 percent of Intel’s total revenue of $59.39 billion.

Keywords: Security, Cybersecurity, McAfee, ARC Advisory Group.