August 19, 2010, 4:30 PM

Intel will buy web site security vendor McAfee

McAfee provides security certification to 27% of the Internet Retailer Top 500.

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Chip maker Intel Corp. said today it will spend $7.68 billion to buy McAfee Inc., a vendor that provides antivirus software and web site security certifications. McAfee provides certification services to 133, or 27%, of the retailers in the Internet Retailer Top 500 Guide.

Intel says both companies’ board of directors approved the deal, which still needs approval from McAfee shareholders. Intel will pay $48 per share for the company. McAfee’s stock on Wednesday closed at $29.93. McAfee will operate as a wholly owned subsidiary that reports to the chipmaker’s Software and Services Group, Intel says.

Intel intends to use the acquisition to expand its role in providing security for such devices as mobile handsets and televisions that consumers increasingly are connecting to the web, the company says.

“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,” says Paul Otellini, Intel’s president and CEO. “In the past, energy-efficient performance and connectivity have defined computing requirements. Security will join those as a third pillar of what people demand from all computing experiences.”

Intel eventually could try to sell off the McAfee business unit that scans retailer web sites and provides security certifications, says John Kindervag, a Forrester Research Inc. analyst. “The retail security sector is really not in Intel’s wheelhouse. They could possibly sell off that part of the business or try and keep it going as a separate business unit but that may be hard to do once the deal closes and McAfee employees are able to cash out their options,” he says.  “In the short term, McAfee’s retail clients will not see a change but they should start investigating their options to be prepared in case Intel starts to break apart the McAfee portfolio.”

McAfee was founded in 1987 and earned $2 billion in revenue in 2009. The company’s certification enables retailers to assure consumers that sites are trusted and protected from hackers. Prominent online retailers that use McAfee’s certification include Avon Products Inc., Redcats USA and Cabela’s Inc.

VeriSign Inc., a McAfee competitor, offers security certification to 29%, or 145, of the retailer in the Top 500 Guide, making it the top provider in this category. Thawte is a distant third, serving 3.4%, or 17, of the top retailers.

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