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McAfee re-established as independent cyber security firm

Intel has spun out its security division as independent firm McAfee, which says it is dedicated to enabling technology, people and organisations to work together

Intel has completed the spin-off of its security business as a standalone pure-play cyber security company under the McAfee brand and the leadership of chief executive Chris Young.

At Focus 2016, the company detailed a wave of product innovations, but said there would be more to come when it became independent.

McAfee plans to expand on its security platform to improve customers’ ability to identify and orchestrate responses to cyber threats, the company said in a statement.

It said it would also target new financial, operational and technology investments to address the cyber security market’s significant global growth opportunity.

“Cyber security is the greatest challenge of the connected age, weighing heavily on the minds of parents, executives and world leaders alike,” said Young, previously senior vice-president and general manager of the Intel Security Group.

“As a standalone company with a clear purpose, McAfee gains the agility to unite people, technology and organisations against our common adversaries and ensure our technology-driven future is safe.”

As announced in September 2016, Intel has partnered global investment firm TPG to spin off its security business as one of the world’s largest pure-play cyber security firms, valued at $4.2bn.

Also, McAfee has announced that private equity investment firm Thoma Bravo has joined, as a minority investor in the company, through an agreement with TPG.

Intel receives $3.1bn in cash and retains a 49% stake in the new business. Intel CEO Brian Krzanich said security remained important to the company.

“In addition to our equity position and ongoing collaboration with McAfee, Intel will continue to integrate industry-leading security and privacy capabilities in our products from the cloud to billions of smart, connected computing devices,” he said.

The move comes five years after Intel’s $7.7bn acquisition of McAfee and two years after rebranding it as Intel Security.

Intel justified the acquisition by outlining plans to push security to every device through building a baseline security capability into every chip.

But those plans have not come to fruition, and some of the key executives at Intel who led the acquisition and championed the concept of hardware-based security have since left the company.

Intel has also been forced to restructure to focus on datacentres for the cloud industry, internet of things (IoT) devices and mobile and wearable technology in the face of the global slowdown in PC sales.

In Intel’s 2016 first-quarter financial results, the security group was one of its best performers, with revenue of $537m, up 5% on the previous quarter and up 12% year on year.

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This made the division ripe for selling and provided a financial boost for Intel in the face of falls in its core PC chip business and restructuring costs.

The $1.1bn equity investment from TPG is intended to help drive growth and enhance McAfee’s focus as a standalone business.

Intel and TPG said in a statement that they would work together to position McAfee as a strong independent company with access to significant financial, operational and technology resources.

Bryan Taylor, partner at TPG Capital and chairman of the board at McAfee, said the company’s “ongoing commitment to product innovation, a rich partner ecosystem, and superior customer service has created a trusted brand that will thrive as a standalone entity”.

He added: “We look forward to working with the company and our partners to accelerate growth and continue building a leading cyber security platform that serves to protect customers in today’s changing environment.”

Seth Boro, a managing partner at Thoma Bravo, said: “Given our years of focus on the security software sector, we see great opportunity for McAfee to continue to advance and innovate.

“Our deep sector knowledge and history of helping build successful businesses will be an asset to the company, and we look forward to working with the management team and our colleagues at TPG and Intel to guide McAfee through its next chapter of growth.”

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