McAfee sells Enterprise Business to Symphony Technology for $4 Billion

McAfee Corporation will dell its Enterprise business to a consortium led by Symphony Technology Group (STG). The all-cash transaction for $4 billion will close by the end of 2021, subject to customary regulatory approvals and closing conditions. This comes in line with STG' purchase of Dell's RSA for $2 Billion last year.

The Enterprise business of McAfee has a clientele of over 86% of the Fortune 100 firms around the world. It had also realized $1.3 billion in net revenue in the fiscal year 2020. With this sale, it aims to purely play in the consumer cybersecurity business. McAfee President and CEO, Peter Leav, stated that the transaction will “allow McAfee to singularly focus on our consumer business”. He further added that this will help them accelerate their strategy for personal security for consumers.

The company has been making some moves in the last year; to return to the public markets after a decade as a private company. According to reports, in January, the company also laid off a couple of hundred employees. It also shut down its software development centre in Tel Aviv. In this deal, until closing, the cybersecurity firm will continue to conduct and operate the Enterprise business. Alternately, McAfee's Enterprise business’ leadership team will partner to plan for a successful transition for the business, its employees, and its customers.

About the deal

Following this transaction, McAfee aims to reduce debt by about $1 billion. Until closing, it will retain its name while the enterprise business will rebrand in the coming months. Further, about $2.75 million of its proceeds will go to its controlled subsidiary Foundation Technology Worldwide (FTW); on a pro-rata basis to all shareholders, including the parent company, the company said in a statement. McAfee will pay about $300 million in corporate taxes and related payments associated with the transaction.

It will also use the remaining proceeds to pay a one-time special dividend of $4.50 per share to its Class A Common stockholders. The firm said it also plans to use a part of the proceeds to pay about $175 million in transaction expenses and other one-time charges. McAfee also expects to pay approximately $300 million in additional one-time separation costs and stranded cost optimization, a portion of which will be expenses paid by proceeds from the transaction.

Goldman Sachs and Co LLC and Morgan Stanley and Co LLC are financial advisors, and Ropes and Gray LLP are legal advisor, to McAfee. UBS Investment Bank, Jefferies LLC and BofA Securities are financial advisors, and Paul Hastings LLP is the legal advisor to STG. UBS Investment Bank, Jefferies Finance LLC and Bank of America are providing financing for the acquisition.

A bitter sour relationship between McAfee and Enterprise business

McAfee has, in past, gone public, then private, now public again. In 2011, Intel has acquired McAfee for $7.7 billion. Five years later, it sold a majority stake in McAfee to a private equity firm TPG for $4.2 billion. When Peter Leav took the security vendor public again, it raised $740 million but have been constant since their listing. Now, when the company has spent almost 2-3 years on making the antivirus business turn into an enterprise security powerhouse, it plans to come back in the consumer cybersecurity playing field.