McAfee Sells Enterprise Security Biz for $4B

McAfee today said it will sell its enterprise security business to Symphony Technology Group (STG) in an all-cash deal for $4 billion. McAfee today said it will sell its enterprise security business to Symphony Technology Group (STG) in an all-cash deal for $4 billion. About a year ago, STG bought security vendor RSA from Dell Technologies for a little over $2 billion. The sale comes less than six months after McAfee went public on the Nasdaq. And in a surprise move, and after spending the last several years transitioning from a consumer antivirus business to an enterprise security powerhouse, McAfee now plans to pivot to a pure-play consumer cybersecurity company. The sale “will unleash our consumer business as our singular focus going forward while unlocking the value of our enterprise business at a very attractive valuation,” McAfee CEO Peter Leav said on a conference call with investors. McAfee’s enterprise security business’ revenue topped $1.3 billion in fiscal 2020, and it claims 86% of Fortune 100 firms globally use its cloud security platform. Meanwhile, the vendor’s consumer business’ revenue grew 24% year over year to $1.6 billion in in fiscal 2020. On the conference call, Leav said that market will reach $19 billion by 2024. The move mirrors similar transactions by McAfee competitors Synamtec and Sophos. In August 2019, Broadcom paid $10.7 billion to acquire Symantec’s enterprise security business and its name. Just five months later, Broadcom sold a piece of it — Symantec’s Cyber Security Services unit — to Accenture for an undisclosed amount. And in October 2019, private equity firm Thoma Bravo bought Sophos for $3.9 billion. McAfee’s journey from a public company, to private, and back to public has been a windy one. Intel acquired McAfee for $7.7 billion in 2011, and five years later sold a majority stake in McAfee to private equity firm TPG for $4.2 billion. In Jaunary 2020, the company announced it hired Peter Leav, former CEO of BMC Software, to replace its CEO Chris Young who had led the security software firm since it spun out of Intel. Then about a year after IPO rumors first surfaced, Leav took the security vendor public again and raised $740 million in its return to the public market. However, the company’s shares haven’t really moved above their $20 price until today. “This is the biggest move [McAfee’s] had since going public,” said Zeus Kerravala, principal analyst at ZK Research. “If you look at their CEO Peter Leav, everywhere he’s gone he’s done a good job of maximizing the value for shareholders.” Still, McAfee’s decision to sell its enterprise business did surprise him, Kerravala added. “There has been a lot of speculation that they might sell the consumer business,” he said. “I think that’s going to be a tough road to hoe in the future. Granted, they had some good growth, but over time, I just see more and more of the consumer technology moving into the cloud, and ISPs will offer that kind of security as part of their services. This was a move to maximize shareholder value.” Kerravala expects STG to combine McAfee’s enterprise security assets with RSA to create a larger company with a more comprehensive platform that can better compete against the likes of Palo Alto Networks and Fortinet. “From an STG standpoint, combining these two could make another formidable, bigger vendor to go toe to toe with Palo and Fortinet,” he said, adding that this likely bodes well for McAfee enterprise customers, too. The security industry is moving toward a platform-based approach as customers look to reduce the complexity of their environments and streamline threat hunting and remediation. “Really the underpinnings of how you go to market with XDR is that platform,” Kerravala said. In late January, McAfee made available its extended detection and response (XDR) platform called Mvision XDR. “So good for shareholders, and likely a good move for the McAfee customers as they become part of a larger organization,” Kerravala said. “And as for what’s left — the consumer business and McAfee — good luck.”