Cyber security company McAfee to go private in $14bn deal
Cyber security software company McAfee has agreed to be taken over for $14bn by a consortium of investors led by private equity firms Advent International and Permira Advisers, in one of the largest leveraged buyouts of the year.
The takeover consortium, which also includes minority investors made up of private equity firm Crosspoint Capital Partners, the Canada Pension Plan Investment Board (CPPIB), Singaporean sovereign wealth fund GIC and the Abu Dhabi Investment Authority, will pay McAfee shareholders $26 a share, a 21 per cent premium to its market price on November 4.
As IT departments move on to cloud networks, cyber security companies have grown and received heavy investment from private equity firms with specialist practices dedicated to the technology.
If completed as expected in the second half of 2022, the deal will end McAfee’s brief run on public stock markets after private equity owners TPG and Thoma Bravo listed it in October 2020.
McAfee was founded in 1987 by John McAfee. He left the company in the mid-1990s. Last year, he was indicted on US charges of tax evasion and was later detained in Spain on charges of market manipulation. He was found dead in his jail cell in June.
In 2016, TPG struck a deal to acquire a 51 per cent stake in the McAfee company, carving the business out of Intel, which retained a 49 per cent interest. Thoma Bravo acquired a minority position in McAfee a year later. Almost 68 per cent of shareholders including TPG and Intel have agreed to the terms of the takeover, McAfee said on Monday.
“We are thrilled to be partnering with premier firms who truly understand the cyber security landscape and have a proven track record of success,” said Peter Leav, chief executive of McAfee.
The proposed deal marks a wildly successful investment for TPG. Intel has also benefited from McAfee’s rising value.
Intel acquired McAfee in 2010 for $7.7bn. When TPG bought its 51 per cent stake for $4.2bn in 2016, it used just $1.1bn of equity with the remainder of the purchase funded with debt. The October 2020 initial public offering raised $740m for McAfee, which was used to repay debt.
This summer, McAfee sold its enterprise business to Symphony Technology Group in a $4bn deal aimed at further cutting its debt. A month after the July 2021 sale, McAfee paid a special dividend of $4.50 a share to shareholders including TPG, Intel and Thoma Bravo.
Monday’s takeover, like TPG’s original carve-out, will require a heavy load of debt.
The takeover consortium will contribute $5.2bn in equity to take McAfee private and raise almost $10bn in debt from banks and the credit funds of two Canadian pension plans including CPPIB.