Private equity firm Symphony Technology Group (STG) has agreed to buy out McAfee’s corporate operations for $ 4 billion, turning the legendary cybersecurity firm into a mainstream company.
The San Jose, Calif.-Based platform security giant is following in the footsteps of its main rival Symantec, which sold its corporate business to Broadcom in November 2019 for $ 10.7 billion and continues to operate its consumer business under the NortonLifeLock brand. This time around, McAfee’s corporate business will be renamed while its consumer business will continue to be publicly traded as McAfee.
“STG is the ideal partner to continue to strengthen our business activities, and the result is a testament to the company’s cutting-edge solutions and, in particular, the exceptional contributions of our employees,” said Peter Leav, President and CEO. McAfee management in a press release. “This transaction will allow McAfee to focus solely on our consumer business.”
[Related: It’s Official: Dell To Sell RSA Security To STG Partners For $2.08 Billion]
The split comes less than five months after McAfee made an initial public offering of $ 740 million that valued the cybersecurity giant at $ 9.5 billion. McAfee stock is up $ 2.31 (10.9%) to $ 23.50 on pre-trade on Monday, the highest the company’s stock has traded since its IPO . The all-cash deal is expected to close by the end of 2021, according to McAfee.
STG has aggressively switched to cybersecurity in recent years, including buying RSA, an encryption pioneer based in Bedford, Massachusetts in September 2020 for $ 2.08 billion. The private equity firm was founded in 2002 and got into cybersecurity with its April 2019 acquisition of the network modeling and risk rating platform RedSeal.
“McAfee is one of the most iconic brands in corporate security and has a reputation for innovation, quality and leadership,” said William Chisholm, managing partner of STG, in a statement. “We are fully committed to driving the company’s strategy to become the leading device-to-cloud cybersecurity company by partnering with the existing world-class team at McAfee.”
McAfee’s business operations have struggled in recent years in the face of big power competitors such as CrowdStrike and SentinelOne. Net revenue for the fiscal year ended Dec. 26, 2020 edged up to $ 1.35 billion, up just 1.2% from $ 1.33 billion a year earlier. And the division’s operating loss rose to $ 180 million, up 19.2% from $ 151 million a year earlier.
Like Symantec before its spin-off, most of McAfee’s growth has been in its consumer business, where net sales jumped in the fiscal year ended Dec. 26, 2020, to $ 1. $ 56 billion, up 19.6% from $ 1.3 billion a year earlier. And the division’s operating profit soared to $ 333 million, up 20.2% from $ 277 million a year earlier.
The current key leaders of McAfee’s corporate operations are Lynne Doherty, who has led sales, presales, channel and marketing since May 2020, and Shishir Singh, who has led strategy and product execution on an interim basis. since January 1 following the resignation. by Ash Kulkarni. McAfee revealed in January that it would lay off 137 employees at its San Jose headquarters effective March 4.
Reports of McAfee seeking to separate its business and mainstream activities began in December 2019, when The Wall Street Journal reported that McAfee was looking to join its own mainstream business with the $ 2.41 billion purely consumer operation of Tempe, Arizona-based rival NortonLifeLock. In this scenario, McAfee’s business and consumer units would have had different owners.
Two months later The Wall Street Journal report, McAfee has brought in Peter Leav, the former CEO of BMC Software and Polycom, as the new CEO. He succeeded Chris Young, who had led the company since October 2014 and oversaw the transfer of the practice from Intel to a stand-alone company in April 2017.