McAfee will become a pure play consumer cybersecurity company

McAfee expects to issue a $4.50 special dividend per Class A share and reduce debt by ~$1 billion upon transaction close

McAfee Corp, 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.

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“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.”

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.

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.

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