Is the time ripe for a McAfee IPO? Others have performed well…
Intel, long rumoured to be looking to cash out of a substantial stake in cybersecurity company McAfee, may get its way this year in an unexpected manner, with Bloomberg reporting that the endpoint protection specialist has hired Morgan Stanley and Bank of America as underwriters to go public at an $8 billion+ valuation.
Intel bought the cybersecurity company – which protects some 525 million consumer
endpoints and 97 million enterprise endpoints – for $7.7 billion in 2010. Private equity firms Thoma Bravo and TPG have since also bought stakes. (TPG buying a 51 percent interest in September 2016 that saw Intel take a large haircut on its investment).
Rumour abounded late last year that Thoma Bravo was in talks with Intel to buy the McAfee outright. The private equity firm has a substantial software portfolio that includes 35 companies (i.e. Digicert, Entrust, LogRhythm, SonicWall and more) worth over $10 billion of annual revenues, but the reported talks have not resulted in a deal.
A McAfee IPO? Rumour Mill Grinds On…
This week, citing sources close to the discussions, Bloomberg said that talks about a potential autumn IPO were well underway, but not set in stone.
Cybersecurity IPOs have fared well in the US recently, with Zscaler, for example, trading up over 300 percent from its offer price after raising $192 in a 2018 IPO, and CrowdStrike soaring in its public debut; it is now up 101 percent over its June 2019 IPO price and trading at 23.3 times fiscal 2020 revenue.
It is precisely upstarts like this however that arguably pose an ongoing threat to McAfee, which has become a popular whipping boy for emerging challengers like Cybereason, whose CEO recently described it to Computer Business Review as “irrelevant” for “treating security like an IT problem”.
McAfee has declined to comment on the reports. It may laugh all the way to the bank. Its market reach is gargantuan (the company’s latest threat research, published today, cites threat data from over one billion endpoints globally) and the market remains hot: there were 314 M&A transactions worth over $11.7 billion in the first half of 2019, according to Momentum Cyber data, with 228 funding rounds raising $4.7 billion.
Something that may make it laugh less: Bloomberg using a picture of rogue “presidential candidate” John McAfee to illustrate its story. (McAfee himself was last seen on Twitter composing a song on the piano for the managers of the “safe house” he is living in; the eccentric founder of the company has had no ties with it since 1994. He has been on the run since 2012 after his alleged involvement in a homicide in Belize).