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Intel sells off security division, retains stake

Intel is set to sell a majority stake in its cyber security division to an investment company. The department, formerly known as McAfee will be majority owned by investment firm TPG after it was sold for $3.1 billion (£2.33 billion).

The move will see Intel, who purchased McAfee for $7.7 billion back in 2011, make a loss of $4.4 billion on the sale. After the contract has been tied up, Intel is to retain 49 per cent of the company, with TPG owning the other 51 per cent. The new cyber security company, which will revert to being called McAfee, is being valued at $4.2 billion.

This deal signifies the end of Intel’s attempt at staking a significant position in the security industry. When Intel purchased McAfee in 2011, it planned on utilising McAfee’s technology in its processors. However, these plans were shelved. In addition to the acquisition, it was anticipated that Intel could move into protecting companies from cyber hacking and espionage.

However, the slowdown in the PC market eroded the potential market for Intel. In April of this year, Intel announced it would cut its workforce by 12,000, approximately 11 per cent of its workforce. It blames the company’s lack of movement into the wider smartphone market. To date, this is the largest restructuring undertaken by Intel.

TPG, on the other hand, has been investing in security startups for a number of years. Most recently, they invested in Tanium and Zscaler, investing $120 million and $100 million respectively. Their interest in McAfee has also been rumoured to have started last year.

The completion of the deal is set to be done by the second quarter of 2017 with Chris Young, currently Intel Security’s general manager, set to be named chief executive.

Filed in: News

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