Intel is going to spin out its subsidiary Intel Security as a joint venture with investment firm TPG, redubbing the new entity with its old name – McAfee.
The deal calls for TPG to make a $1.1 billion equity investment and own 51 percent of the company, with Intel retaining 49%.
In a joint statement the companies say the investment will be used to help the spinout gain its feet as a stand-alone business and to drive growth.
Intel bought McAfee in 2010 for $7.68 billion with the intent of tying McAfee’s security technology with Intel’s chips.
Since then Intel has incorporated technology in some chips that power features of its security software, and Intel Security’ endpoint protection technology is well thought of, consistently ranking among the leaders in Gartner’s analysis of that category. It is ranked number two in market share behind Symantec and in front of Trend Micro.
Its offerings also include network security gear and management, database, Web and server security, and encryption products.
The transaction will be made in multiple steps with the actual spinout expected to occur sometime next spring. The deal values Intel Security at $4.2 billion, which is based on the entity’s $2.2 billion equity value and its $2 billion in debt. The plan calls for Intel to continue servicing the debt until audited financial statements are completed, likely three to five months after the deal closes, the companies say.
Intel says that during the first half of this year Intel Security Group revenue grew 11 percent to $1.1 billion, and operating income grew 391 percent to $182 million.
The deal will require regulatory approval.
McAfee will be led by CEO Chris Young, who previously worked for Cisco and VMware and currently serves as senior vice president and general manager of Intel Security Group.
In an open letter to investors and customers he says the company will hit its announced goals for its portfolio. “We are resolute in delivering our product roadmaps, and this new partnership and pure - play status allows us to invest more and execute even faster to enhanceour product and services offerings on your behalf,” he writes.
He says the spinout will be “focused agile and independent” with the goal of helping enterprises “detect and respond to more threats faster and with fewer resources.”
“With the new investment from TPG and continued strategic backing of Intel, the new entity is expected to capitalize on significant global growth opportunities through greater focus and targeted investments,” TPG and Intel say.
In its latest Magic Quadrant evaluation of endpoint security vendors, Gartner highlights Intel Security’s endpoint agent. “Intel Security has integrated its core endpoint security components into a common endpoint agent, Endpoint Security ENS (v 10.1),” the report says.
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