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Intel partners with TPG to spin-off McAfee security into independent entity valued at $4.2 billion

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Finally putting all rumors to rest, the renowned chipmaker Intel has announced that it will spin-off its security unit into a separate independent entity, run in partnership with PE firm TPG.

The two parties have both signed a definitive agreement to establish a jointly-owned cybersecurity company, where-in TPG will have a majority 51 per cent ownership stake as compared to Intel’s 49 per cent. The transaction values the combined business at approximately $4.2 billion, based on equity value of $2.2 billion plus net debt of $2 billion. For now, the debt will continue to be financed by Intel.

TPG will pay out Intel with $3.1 billion in cash, and make an additional $1.1 billion equity investment to help drive growth and enhance focus on the standalone business. The transaction is expected to close in the second quarter of 2017.

The new conjoint effort will now be renamed to ‘McAfee‘ and continue to operate as one of the largest pure-play cybersecurity companies in the world. If you’re unaware, Intel had setup its own security unit after acquiring McAfee for $7.68 billion in 2011. It has since then spent time merging the two technologies to create a full-stack security service for use by industry professionals, and it has a meager 11 per cent revenue growth to show for its continued efforts.

It is currently also stuck amid a lawsuit with the former’s pioneer founder John McAfee, who is suing the chipmaker from denying him the right to use his own name in future innovative projects. Intel, however, believes that it had also purchased the right to the name ‘McAfee’ during the aforementioned acquisition.

Christopher Young, Intel’s senior VP and GM of security will lead the newly-formed firm as the chief executive. He has published an open letter to Intel Security’s stakeholders outlining benefits of the new company. In the letter, Young mentions that he’s beyond energized for the company’s future prospects.

We have the right strategy and product portfolio to stay ahead of the adversaries who undermine our digital world. We employ the most talented people steadfast to being our customers’ preferred security partner.

He also says that there is no shortage of buzz around the word cybersecurity and hacking these days. The company, he says, stands on the good side of the fight and plans to redefine security standards making the service beneficial for all of its customers, partners, and employees alike.

And, with this move, we will create the ideal company structure to position McAfee for enhanced focus, innovation and growth. In the end, McAfee will emerge in a position of greater strength, still fully committed to being the best provider in the cybersecurity industry worldwide.

adds Young.

The joint effort of Intel and Texas Pacific Group(TPG) will build upon the already comprehensive security platform that protects more than a quarter of a billion endpoints. The security agency also secures the footprint for nearly two-thirds of the world’s 2,000 largest companies, detects more than 400k new threats each day.

Commenting on the partnership, Jim Coulter, co-founder and co-CEO of TPG says,

We believe that McAfee will thrive as an independent company. With TPG’s investment, along with continued support from Intel, McAfee will sharpen its focus and become even more agile in its response to today’s rapidly evolving security sector.

TPG is excited to partner with Intel and McAfee management to accelerate growth of the business by enhancing its go-to-market strategy and continuing to grow and strengthen its core product offerings.


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