Security software company's board agrees to purchase by microprocessor giant at $48 a share, with total value of $7.68bn

This article is more than 10 years old

This article is more than 10 years old

Intel has agreed to buy the security software firm McAfee for $7.68bn (£4.9bn).

The microprocessor giant, which controls more than 70% of the global market for microchips, will pay $48 for each share of McAfee, representing a 60% premium to Wednesday's closing price.

A spokesperson for Intel said the deal highlights "that security is now a fundamental component of online computing".

Paul Otellini, president and chief executive of Intel, added: "With the rapid expansion of growth across a vast array of internet-connected devices, more and more of the elements of our lives have moved online. In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences."

The deal has been unanimously approved by both companies' boards of directors, though still requires approval from McAfee shareholders and clearance from regulators.

The McAfee president and chief executive, Dave DeWalt, said the deal "is big news for McAfee and big news for Intel, but bigger news for our combined customers, the security industry and the future of the internet".

"We are joining forces to tackle this next-generation cybersecurity issue, which impacts everyone and anything connecting to the internet," De Walt added. "Security will be a third pillar in Intel's strategy, next to power efficient performance and Internet connectivity."

The acquisition – Intel's biggest since buying Level One Communications for $2.2bn in 1999 – signals the company's intent to expand outside the confines of hardware, said Otellini. "In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences."

Industry observers are anticipating a "ripple effect" from the deal, saying that it highlights the importance of computer security.

"Intel's acquisition of McAfee will not only fundamentally change the security landscape, it will have a ripple affect throughout the industry," said the chief executive of software security firm Lumension, Pat Clawson. "With this acquisition Intel is addressing areas that we really need to get better at protecting – smartphones, televisions, medical technology and cash machines. Short term, it gives Intel a competitive advantage but will no doubt make other chip manufacturers, like AMD, consider whether they need to mirror the acquisition.

"For the security industry, it makes the top layer of the security stack – such as Symantec – obvious acquisition targets not only for chip manufacturers but also hardware providers, such as mobile device manufacturers. On the flipside, it could leave a wasteland of security companies as mid-sized security companies see a diminishing number of prospective acquirers."

Earlier this month, Intel struck a deal with the US Federal Trade Commission requiring the company to modify its intellectual property agreements to give competitors more freedom.

The deal followed charges that it exploited its market dominance by punishing computer-makers that opted to use alternative chips.

Last month, Intel recorded its largest quarterly net income in a decade, citing a stronger computer market as propelling its fortunes.

Otellini said at the time: "Now that corporations have some breathing room in the economy and their budgets, you're starting to see those machines that were four or five years old get refreshed."

McAfee shares surged 58% to $47.42 after the deal was announced today, while Intel shares slipped 2.5% to $19.11.