SAN JOSE, Calif. - Intel Corp.'s proposed $7.68 billion acquisition of security software vendor McAfee Inc. expands its ongoing push in the embedded front, especially in the mobile space.
But questions remain about the surprising deal. Intel (Santa Clara, Calif.) said Thursday it entered into a definitive agreement to acquire McAfee for $48 per share in cash, a 60 percent premium over McAfee's closing price of $29.93 Wednesday. Both companies' board of directors unanimously approved the deal, Intel said.
There are parallels between the proposed McAfee deal and Intel's 2009 acquisition of real-time embedded software vendor Wind River Systems Inc.
However, security software is a different technology. ''In a market still dominated by desktops and laptops, the business model for embedding (security) software at the processor level is still immature. The prevalent model is to load software on a finished product, a model that does not give much advantage to a Intel/McAfee combination,'' said Allan Krans, an analyst with Technology Business Research Inc., in a report.
''However, with the rise of tablets and mobile phone-based computing will bring with it increased demand for software intelligence that is embedded at the hardware level. All security vendors have recognized and responded in some way to the mobile computing security threat, but offerings are not currently prevalent in the market,'' Krans said.
''With more sensitive and even confidential computing tasks being performed on mobile devices, demand for security will not lag far behind. Intel’s acquisition of McAfee may not have a profound impact in the PC market, but could allow both Intel and McAfee to benefit significantly from rising demand for embedded mobile security that has a minimal impact on device performance,'' he said.
McAfee is somewhat different than its rivals. ''While dwarfed by market leader Symantec, McAfee enjoyed the differentiation provided by being the largest pureplay security vendor,'' he said. ''After riding its pureplay status and frequent acquisitions to close the gap in security, McAfee now joins Symantec in providing security as part of a much broader product set. During 2Q 10 McAfee ended a growth streak that included seventeen consecutive quarters of double-digit revenue growth largely fueled by acquisitions.''