Security software provider McAfee is selling its enterprise business for $4bn to focus on the consumer market just as its founder is facing fraud charges.
The cybersecurity company will sell its enterprise business to a consortium led by private equity firm Symphony Technology Group in an all-cash transaction expected to close by the end of 2021 once it has been given the regulatory stamp of approval.
The jettisoned enterprise business will be rebranded in the coming months while the remaining consumer business will keep the McAfee name.
“This transaction will allow McAfee to singularly focus on our consumer business and to accelerate our strategy to be a leader in personal security for consumers,” said McAfee president and CEO Peter Leav in a statement.
McAfee’s latest earnings show why the device-to-cloud company has decided to put all its eggs in the consumer basket. In the quarter ended 24 February 2021, McAfee’s consumer business grew 23% year on year, while its enterprise division grew by just 5%.
For the full fiscal 2020 year, the Santa Clara-headquartered firm’s consumer revenue was up 20% year on year at $1.6bn, while enterprise revenue grew by just 1% to $1.3bn.
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The sale will help reduce McAfee’s debt by approximately $1bn. Some $175m of the proceeds will go towards “customary transaction expenses and other one-time charges”.
The remaining $2.75bn will be distributed by a McAfee controlled subsidiary to all holders on a pro-rata basis. Around $300m will go to corporate taxes and costs associated with the transaction.
In February 2020 Symphony Technology Group acquired enterprise security company RSA for $2bn, suggesting that the private equity group is on the path to building a merged company that builds on McAfee and RSA’s strong brand recognition and existing customer base.
“McAfee is one of the most iconic brands in enterprise security and has a reputation for innovation, quality and leadership,” said William Chisholm, managing partner at STG.
“We are fully committed to driving the business’ strategy to be the leading device-to-cloud cybersecurity company by partnering with McAfee’s existing world-class team to continue delivering exceptional performance to enterprises and government clients globally.”
Meanwhile, in John McAfee land…
In 1987 computer programmer and businessman John McAfee founded McAfee, which he ran until 1994.
He has launched and run a number of companies since but has become most well-known for his colourful lifestyle. The libertarian made failed bids to become President of the United States in 2016 and 2020. He was arrested in Barcelona in October 2020 on tax evasion charges.
Last week the US Justice Department charged the McAfee founder with conspiracy to commit fraud and money-laundering. The antivirus software creator allegedly used his one million follower Twitter account to artificially inflate the prices of cryptocurrencies before selling them off at a profit.
According to US authorities, McAfee and his bodyguard made $13m from the schemes.