Intel McAfee Deal was Top Secret
NEW YORK (AP) _ Chip maker Intel said Thursday it is buying computer-security software maker McAfee for $7.68 billion, or $48 per share.
The per-share price represents a 60 percent premium over McAfee's Wednesday close of $29.93. McAfee shares surged 58 percent after the deal was announced Thursday to hit $47.42 in premarket trading. Intel shares slipped 2.5 percent to $19.11.
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Intel, which is based in Santa Clara, said the deal highlights "that security is now a fundamental component of online computing."
Intel said the deal with hurt earnings slightly in the first year the companies are combined. Excluding costs and other one-time items related to the acquisition, Intel predicts the deal will slightly boost earnings next year and improve after that.
Both boards of directors have unanimously approved the deal. The deal still requires McAfee shareholder approval and regulatory clearances.
McAfee, also based in Santa Clara, is one of the world's largest security technology companies with about $2 billion in revenue last year.
Intel has made a series of recent software acquisitions including companies that specialize in gaming, visual computing, embedded device and machine software.
A Top Secret Merger
News of the big tech-merger was kept under wraps until the very last minute. Intel and McAfee went to great lengths to keep the deal from leaking out prematurely.
"We were all kind of sequestered in San Francisco the last five to ten days," said Intel's director of communications Bill Kircos. He says their tight-lipped approach to the McAfee merger worked well for all parties.
"Typically these things leak or rumors get out and it was kind of interesting that it was a surprise to Wall Street this morning, and that it was kept secret," said Kircos.
Once the secret was out, workers at McAfee headquarters in Santa Clara were clearly excited. None agreed to go on tape, but many employees said they were "happy" and "stoked," and said the merger was definitely "good news."
Their jobs should be very secure, according to Kircos. "They're going to remain a wholly owned subsidiary so what they were doing yesterday is exactly what they'll be doing tomorrow."
Eric Savitz, tech writer for Barrons, says the Intel-McAfee merger is exactly the way big business deals like this are supposed to go.
"When everyone does their job and follows the rules and stays quiet, you get something like what happened today, which was really quite a spry thing," said Savitz. "I don't think anybody was speculating that this was going to happen."
