Intel Buying Security Firm McAfee for $7.68 Billion

Chipmaker Intel is buying security software maker McAfee in a $7.68 billion deal, significantly expanding its online service business.

Chipmaker Intel has announced an agreement to acquire security software maker McAfee in a deal valued at $7.68 billion. The acquisition will not only expand Intel’s security-related business—which, until now, has been mostly related to hardware—but also bolster’s the company’s shift towards offering online and mobile services in addition to hardware as it seeks to diversify its business.

“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 CEO Paul Otellini, in a statement. “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.”

Intel will pay $48 per share for McAfee, which represents a 60 percent premium over the company’s closing price of $29.93 on Wednesday.

Otellini said Intel and McAfee have been collaborating for the last year and a half, and the partnership will result in products due to reach market in 2011. Neither Intel or McAfee has discussed the nature of those products.

Intel has been keen to establish a bigger footprint in the mobile device market—and building serious security into its chipset solutions might be a good way to get a leg up on its competitors.

“Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow,” said Intel senior VP of Software and Services Renée James. “This acquisition is consistent with our software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility.”

Although Intel has made some relatively high-profile acquisitions in recent years—including the Havok physics engine used in gaming and embedded systems company Wind River—the company, historically, has not strayed for from its processor and system-on-a-chip businesses. And the company has met with considerable success there, with its market-dominating position drawing litigation from antitrust regulators around the world—Intel justsettled with the FTC and agreed to significantly change the way it markets processors to system manufacturers.