McAfee Corp. 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 been part of the company for more than 30 years, with a focus on device-to-cloud cybersecurity solutions which it provides for 86% of the Fortune 100 firms around the world. The business realized $1.3 billion in net revenue in fiscal year 2020.
McAfee President and Chief Executive Officer, Peter Leav, said the transaction will allow McAfee to singularly focus on its consumer business.
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 its Class A Common Stock. This represents a one-time special dividend rate of approximately 21% of the closing sale price of the 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.
The Enterprise business will be rebranded, 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.