McAfee is reportedly nearing a deal to be sold to private equity firms Advent International and Permira just a year after returning to the public markets.
The US-based consumer cybersecurity company is expected to be valued at more than US$10 billion, or around US$25 per share, in a deal that could be announced by Monday, according to media reports. This would be the third-biggest cybersecurity acquisition of all time, behind only Thoma Bravo’s US$12.3 billion purchase of Proofpoint and Broadcom’s $10.7 buy of Symantec’s enterprise business.
McAfee’s stock shot up $4.25 (20.04 percent) to $25.46 per share following reports from Bloomberg and The Wall Street Journal just before the market closed Friday. That’s the highest McAfee’s stock has traded since Sept. 7. Neither McAfee, Advent International nor Permira immediately responded to requests for comment.
The company went public just over a year ago, raising US$740 million on a US$9.5 billion valuation, which was at the time the highest ever market cap for a newly public cybersecurity vendor (SentinelOne has since surpassed that with a $10 billion IPO valuation). That valuation included both McAfee’s consumer and enterprise businesses, the later of which was sold to Symphony Technology Group in July for $4 billion.
Most of McAfee’s Class A stock is owned by private equity firm TPG, while Snowflake and Thoma Bravo each hold more than 10 percent of the company’s Class A stock, according to April filings with the US Securities and Exchange Commission (SEC). McAfee’s Class B stock, meanwhile, is majority-owned by Intel, while TPG and Thoma Bravo each hold significant minority stakes, according to regulatory filings.
McAfee was acquired by Intel in 2011 for US$7.6 billion, and then sold in 2017 to TPG for US$4.2 billion, at which time Thoma Bravo took and Intel retained minority stakes. More recently, sales for the company’s consumer division jumped to US$467 million in the quarter ended June 26, up 21.9 percent from US$383 million a year earlier. The division recorded net income of US$36 million, or $0.21 per diluted share.
This is not Advent and Permira’s first attempt at breaking into the consumer cybersecurity market, with the Wall Street Journal reporting in September 2019 that the private equity firms were looking to buy top McAfee rival NortonLifeLock (then known as Symantec‘s consumer business) for more than US$16 billion.
But the deal never came to fruition, and NortonLifeLock has instead moved to consolidate the consumer cybersecurity market by agreeing in August to merge with Czech cybersecurity vendor Avast in a deal valued at between US$8.1 billion and US$8.6 billion.
Advent ended up getting into the cybersecurity business through a contentious US$1.4 billion acquisition of IoT security vendor Forescout in August 2020. Advent planned in February 2020 to buy Forescout for US$1.9 billion but attempted to walk away from the deal in May, forcing a court proceeding. Just five days before the trial was to begin, the two sides settled after the purchase price was cut by US$500 million.