McAfee and its private equity owners are meeting with bankers this week to discuss plans for a US$1 billion IPO, according to a report in The Wall Street Journal.
The public offering might come as soon as this year, and could value the platform security vendor at more than US$5 billion, people familiar with the matter told The Wall Street Journal. The publication cautioned, however, that there's no guarantee McAfee will successfully stage an IPO or achieve that valuation.
Private equity firm TPG has held a majority stake in McAfee since April 2017, with Intel and private equity firm Thoma Bravo both holding minority stakes. McAfee was valued at US$4.2 billion at the time of its spinout from Intel, well below the US$7.6 billion Intel initially paid to acquire the company back in 2010.
But under its current ownership, The Wall Street Journal said McAfee has boosted its cash flows through changes to its business strategy as well as acquisitions. Public investors keep a close eye on cash flows, the publication said.
McAfee bought cloud access security broker (CASB) leader Skyhigh Networks in January 2018, and Canadian VPN service provider TunnelBear in March 2018.
Intel and TPG declined to comment for this story. McAfee and Thoma Bravo didn't immediately respond to requests for comment.
McAfee's owners have considered an outright sale of the company in the past, and The Wall Street Journal said they could ultimately end up choosing that path over an IPO. Specifically, CNBC reported in December 2018 that Thoma Bravo was having conversations with Intel and TPG about buying both of them out and obtaining a controlling stake in McAfee.
But sources told The Wall Street Journal that McAfee's current owners are optimistic about a potential IPO in part because close public competitors of McAfee like Symantec, Avast, and Palo Alto Networks have been trading relatively well recently. The IPO would be déjà vu for McAfee, which first operated as a standalone publicly-traded company from December 1999 until its acquisition by Intel 11 years later.
McAfee and top endpoint security rival Symantec could be heading in opposite directions as far as ownership is concerned. Symantec has been publicly traded for more than 30 years, but Bloomberg and others have reported that a blockbuster acquisition by semiconductor manufacturer Broadcom, valuing Symantec at more than US$22 billion, could be imminent.
A Broadcom-Symantec deal would in many ways mirror the Intel-McAfee combination at the start of the 2010s, with a chipmaker and security vendor joining forces in pursuit of synergies. Since Bloomberg first reported the takeover talks late July 2, Symantec's stock has climbed 16.2 percent from US$22.10 to US$25.69 per share, while Broadcom's stock has fallen 7 percent from US$295.33 to US$274.79 per share.
An IPO raising at least US$1 billion for McAfee would be the largest in the cybersecurity space since at least 2018, with only next-generation endpoint security vendor CrowdStrike's US$612 million IPO in June 2019 even coming close.
CrowdStrike, however, achieved a US$6.6 billion valuation at the time of its public offering, exceeding the US$5 billion valuation Wall Street Journal sources said McAfee is expected to notch as part of its IPO.