McAfee to Sell Enterprise Division for $4 Billion

McAfee, a leading security company, has announced the sale of its enterprise business unit. The transaction, valued at $4 billion, will see the business acquired by a consortium spearheaded by Symphony Technology Group.

Strategic Alignment with RSA

This acquisition is anticipated to complement Symphony Technology Group’s existing portfolio, particularly its purchase of RSA, another enterprise security firm. The RSA acquisition occurred last February for a sum of $2 billion.

Focus on Consumer Security

Peter Leav, President and CEO of McAfee, stated the divestiture will enable the company to concentrate its efforts on the consumer market. He emphasized a strategic shift towards becoming a dominant force in personal security solutions for individual users.

Recent Corporate Developments

Over the past year, McAfee has undergone several significant changes. The company returned to the public market after a decade of private ownership.

Reportedly, in January, the firm reduced its workforce by approximately two hundred employees and closed its software development facility located in Tel Aviv.

Synergies and Market Positioning

While Symphony Technology Group has not explicitly referenced the RSA deal, the combined investments establish a substantial legacy security business. Both McAfee and RSA possess strong brand recognition.

However, they may be facing increased competition from newer, more agile security providers in the current marketplace.

Financial Performance Highlights

Analyzing McAfee’s Q4 2020 earnings report, released on February 24, 2021, reveals a notable disparity in growth rates. The consumer segment experienced a robust 23% year-over-year increase.

In contrast, the enterprise division’s growth was considerably slower, registering only a 5% year-over-year gain.

Full Year 2020 Revenue

For the entirety of fiscal year 2020, McAfee reported total revenue of $2.9 billion, representing a 10% increase year-over-year. This figure comprised $1.6 billion in consumer net revenue, up 20% year-over-year, and $1.3 billion in enterprise net revenue, a modest 1% increase.

A History of Transitions

McAfee’s corporate journey has been complex. Originating in the 1980s as a firewall software vendor, the company went public before being acquired by Intel in 2010 for $7.7 billion.

It subsequently returned to private ownership. In 2014, the company rebranded as Intel Security, before Intel divested a majority stake to TPG in 2017 for $4.2 billion, leading to the reinstatement of the McAfee name.

Transaction Timeline

The completion of this transaction is anticipated before the end of the current year, contingent upon fulfilling all necessary regulatory requirements.

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