Device-to-cloud cybersecurity company McAfee is all set to sell its enterprise business to a consortium led by Symphony Technology Group in an all-cash deal. The transaction, finalised at $4 billion, is expected to be completed by the end of this year.

As per McAfee President and Chief Executive Officer Peter Leav, with the sale of the enterprise side, the company hopes to direct the resources and time to its consumer side. McAfee’s enterprise business serves 86 percent of the Fortune 100 companies.

What Does This Deal Mean For McAfee?

The 2020 fourth-quarter revenue earnings report showed that while the consumer business grew at 23 percent year-on-year, enterprise business saw only a 5 percent improvement. Of the $2.9 billion revenue reported for FY2020, $1.6 billion was from the consumer side, up 20 percent year-on-year. On the other hand, the company’s net revenue stood at $1.3 billion, just a 1 percent increase year-on-year. 

By selling the enterprise side, McAfee aims to become a pure-play consumer cybersecurity company. The cash will be used to pay off McAfee’s debt, amounting to approximately $1 billion. The company also expects to use the transaction proceeds to pay roughly $175 million in customary transaction expenses and other one-time charges. The $2.75 billion of remaining proceeds will be distributed by Foundation Technology Worldwide, McAfee’s controlled subsidiary, on a pro-rata basis to all holders, including McAfee Corp.

“Following the close of the transaction, we will be focused exclusively on the large and growing consumer cybersecurity market and continuing to grow in this expanding TAM [total addressable market] with our market-leading consumer subscription business, resulting in sustained double-digit revenue growth, profitability at scale and strong cash flows,” Leav said.

McAfee was founded in the 1980s and initially operated as a firewall software vendor. It eventually went public but went private again after being purchased by Intel in 2010 in a $7.7 billion deal. Soon after the sale, McAfee was renamed Intel Security. In 2017, when TPG bought a majority stake in McAfee, the old name was restored.

What’s In It For STG?

Earlier, an STG-led consortium had acquired RSA, one of the world’s largest pure-play cybersecurity and risk management organisations, from Dell Technologies and set it up as an independent company. 

The deal was finalised at $2.08 billion. The transaction included RSA’s four product lines–RSA Archer, RSA NetWitness, RSA SecurID, and RSA Fraud & Risk Intelligence– as well as the industry-leading RSA conference. The RSA conference is the world’s largest cybersecurity event. What began as a small cryptography conference has now grown to include a multi-day conference in Asia-Pacific and smaller conferences worldwide.

Two of STG’s recent acquisitions in the cybersecurity space–McAfee and RSA have created a ‘large combined legacy security business’ for the organisation. STG was founded in 2002 and had been investing in software, data, and analytics since. In 2019, STG picked up a majority stake in RedSeal, a network modelling and risk scoring platform RedSeal for a reported $100 million. The deal was its first investment in the cybersecurity sector.

Wrapping Up

McAfee’s rival Symantec sold its enterprise business to Broadcomm in November 2019 for $10.7 billion. Its consumer business continues to operate under the NortonLifeLock brand. Further, experts also believe that since NortonLifeLock and McAfee would be operating as pure-play consumer cybersecurity vendors, a merger between the two is also possible.

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