Intel has entered into a definitive agreement to acquire McAfee through the purchase of all of the company's common stock at USD48 per share in cash, for approximately USD7.68bn.

Both boards of directors have unanimously approved the deal, which is expected to close after McAfee shareholder approval, regulatory clearances and other customary conditions specified in the agreement.

McAfee, which has enjoyed double-digit year-over-year growth and nearly 80 per cent gross margins last year, will become a wholly-owned subsidiary of Intel, reporting into Intel's software and services group. The group is managed by Renée James, Intel senior vice president and general manager of the group.

"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 president and chief executive. "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.

"The addition of McAfee products and technologies into the Intel computing portfolio brings us incredibly talented people with a track record of delivering security innovations, products and services that the industry and consumers trust to make connecting to the Internet safer and more secure.”

"The cyber threat landscape has changed dramatically over the past few years, with millions of new threats appearing every month," says Dave DeWalt, president and chief executive of McAfee. "We believe this acquisition will result in our ability to deliver a safer, more secure and trusted Internet-enabled device experience."

McAfee, based in Santa Clara and founded in 1987, is the world's largest dedicated security technology company with approximately USD2bn in revenue in 2009.

Intel has made a series of recent software acquisitions to pursue a strategy focused on companies delivering software that takes advantage of silicon. These include gaming, visual computing, embedded device and machine software and now security.

Intel and McAfee will jointly explore future product concepts to further strengthen security in the cloud network and computers and devices.

On a GAAP basis, Intel expects the combination to be slightly dilutive to earnings in the first year of operations and approximately flat in the second year. On a non-GAAP basis, excluding a one-time write down of deferred revenue when the transaction closes and amortisation of acquired intangibles, Intel expects the combination to be slightly accretive in the first year and improve beyond that.

Intel was advised by Goldman Sachs and Morrison & Foerster. McAfee was advised by Morgan Stanley and Wilson Sonsini Goodrich & Rosati.