Intel to buy McAfee

WSJ is reporting that Intel is going to be buying McAfee.  Maybe next time you buy an Intel processor, it'll come with a free copy of McAfee you can throw away because it's terrible.

Intel Corp. (INTC) agreed to buy computer-security software firm McAfee Inc. (MFE) for $7.68 billion, as the chip maker moves increasingly into the software sector to support its expansion outside of the PC market.

The Silicon Valley giant will pay $48 for each share of McAfee, a 60% premium to Wednesday's closing price. The stock last traded at that level in 1999.

The acquisition is the latest in a string of deals aimed at consolidating formerly disparate parts of the technology sector. Tech giants dominant in particular areas of the industry are using acquisitions to grab footholds in faster-growing markets. Hewlett-Packard Co.'s (HPQ) recent purchase of Palm Inc. was aimed at moving the world's largest PC maker into the smartphone sector. Meanwhile, Oracle Corp. (ORCL) purchased Sun Microsystems last year to expand from selling software into providing a complete hardware and software package for corporate IT departments.

Intel's acquisition of McAfee, the company's largest-ever purchase, seeks to help the company expand into two new markets: smartphones, and the myriad electronic devices such as billboards, automated teller machines and others known as "embedded systems," that are increasingly connecting to the Internet, providing more personalized and interactive features.

Shares of McAfee were recently up 58% to $47.18--they were down 28% the past year through Wednesday--while Intel declined 2.5% to $19.10.

"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," said Intel President and Chief Executive Paul 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."