STG-led consortium to acquire McAfee’s enterprise business for $4bn

McAfee Corp has agreed to sell its enterprise business to a consortium led by Symphony Technology Group for $4 billion.

McAfee Corp has agreed to sell its enterprise business to a consortium led by Symphony Technology Group for $4 billion. The deal is expected to close by the end of 2021. Goldman Sachs and Morgan Stanley are serving as financial advisors to McAfee on the deal while UBS Investment Bank, Jefferies LLC and BofA Securities are doing likewise to STG.

PRESS RELEASE

SAN JOSE, Calif. & PALO ALTO, Calif.–(BUSINESS WIRE)–McAfee Corp. (Nasdaq: MCFE), the device-to-cloud cybersecurity company, today announced it has entered into a definitive agreement to sell its Enterprise business to a consortium led by Symphony Technology Group (STG) in an all-cash transaction for $4.0 billion. The transaction is expected to close by the end of 2021, subject to customary regulatory approvals and closing conditions.

McAfee’s Enterprise business has set the pace and standard within the cybersecurity industry for more than 30 years and has become a recognized leader for device-to-cloud cybersecurity solutions. Today, the Enterprise business is a trusted partner for 86% of the Fortune 100 firms around the world and realized $1.3 billion in net revenue in fiscal year 2020.

McAfee President and Chief Executive Officer, Peter Leav, commented “STG is the right partner to continue strengthening our Enterprise business, and this outcome is a testament to the business’ industry-leading solutions and most notably to the outstanding contributions of our employees.” Leav added, “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.”

“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.”

News Highlights:
Divestiture of McAfee Enterprise business for $4.0 billion in cash before tax
McAfee to become pure play consumer cybersecurity company
McAfee expects to issue an estimated $4.50 special dividend per Class A common share upon transaction close
McAfee expects to reduce debt by approximately $1 billion, which is expected to result in a neutral impact to net leverage ratio

In addition to the repayment of approximately $1 billion of existing McAfee indebtedness, McAfee also expects to use a portion of the proceeds from the transaction to pay approximately $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. McAfee Corp. will use its pro rata portion of such proceeds to pay approximately $300 million in required corporate taxes and related payments in connection with the transaction, and will use all remaining proceeds to pay a one-time special dividend of $4.50 per share to holders of our Class A Common Stock. This represents a one-time special dividend rate of approximately 21% of the closing sale price of our Class A Common Stock on Friday, March 5, 2021 prior to McAfee’s entry into the transaction.

McAfee also expects to pay approximately $300 million in additional one-time separation costs and stranded cost optimization, a portion of which will be expenses paid by proceeds from the transaction.

Until closing, McAfee will continue to conduct and operate the Enterprise business, while McAfee, STG, and the Enterprise business’ leadership team will partner to plan for a successful transition for the business, its employees, and its customers.

At close, McAfee will retain its name and will continue its singular focus on delivering leading solutions to protect consumers and being a leader in personal security for consumers. The Enterprise business will be re-branded, which is expected to occur in the coming months.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are acting as financial advisors, and Ropes & Gray LLP as legal advisor, to McAfee.

UBS Investment Bank, Jefferies LLC and BofA Securities are acting as financial advisors, and Paul Hastings LLP is acting as legal advisor, to STG. UBS Investment Bank, Jefferies Finance LLC and Bank of America are providing financing for the acquisition.

About McAfee
McAfee is the device-to-cloud cybersecurity company. Inspired by the power of working together, McAfee creates consumer and business solutions that make the world a safer place. www.mcafee.com

About STG
Symphony Technology Group (STG) is the private equity partner to market leading companies in data, software, and analytics. The firm brings expertise, flexibility, and resources to build strategic value and unlock the potential of innovative companies. Partnering to build customer-centric, market winning portfolio companies, STG creates sustainable foundations for growth that bring value to all existing and future stakeholders. The firm is dedicated to transforming and building outstanding technology companies in partnership with world class management teams. STG’s expansive portfolio has consisted of more than 35 global companies. For more information, please visit www.stgpartners.com.