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McAfee launches IPO, raises $620 million

McAfee has returned to Wall Street, which comes months after the endpoint security vendor's previous CEO, Christopher Young, was replaced by Peter Leav in January.

More than 20 years after its first initial public offering, McAfee is once again a publicly-traded company.

Launching its IPO under the ticker symbol MCFE, the endpoint security company raised an estimated $620 million. On Oct. 13, McAfee filed an S-1 form with the U.S. Securities and Exchange Commission for the IPO. The company offered a total of 37,000,000 shares, including 30,982,558 offered by McAfee and 6,017,442 sold by existing stockholders. The filing expected the IPO price to be between $19.00 and $22.00 per share; on Wednesday McAfee announced the price per share was set at $20.00.

McAfee shares are set to begin trading on Nasdaq Thursday morning

Founded in 1987 as McAfee Associates, the company rose to prominence as an antivirus vendor in the 1990s. McAfee first went public in 1999, raising an estimated $75 million, and became one of the largest vendors in the growing cybersecurity market during the 2000s. McAfee was then acquired by Intel in 2011 for nearly $7.7 billion.

The chipmaker rebranded McAfee as Intel Security and aimed to combine the company's security software with its own microprocessor hardware. But in 2016, Intel agreed to spin off the business in a deal with private equity firm TPG Capital. Intel earned $3.1 billion from the transaction and retained a 49% stake in the company, which was later rebranded as McAfee once the spinoff was completed in 2017.

Eric Parizo, senior analyst at Omdia (formerly Ovum), said that the IPO is a sign that McAfee's prospects are looking up after a less-than-stellar life under Intel.

"The move is also a sign that McAfee's fortunes are once again on an upward trajectory. After languishing within Intel for many years, McAfee was spun out as an independent company again in 2017, and was steadily making much-needed gains in revamping its dated product portfolio under CEO Christopher D. Young. However, the decision to replace Young back in January with veteran technology industry executive Peter Leav was a signal that McAfee's investors (TPG Capital, Intel, and Thoma Bravo) had run out of patience with the vendor's multiyear transformation effort," he said in an email to SearchSecurity.

Chris Steffen, research director at Enterprise Management Associates, called the IPO the "next logical step" for the company.

"I think the IPO is a fundamentally good thing, and the next logical step for McAfee as a company since Intel spun the company out in 2017," Steffen told SearchSecurity. "Now that the company has returned to profitability, McAfee can use the additional revenue from the IPO to expand their offerings, increase their acquisitions to strengthen their security portfolio and augment their sales/channel programs, hopefully to increase their market share."

Enterprise Strategy Group vice president and group director of cybersecurity Doug Cahill also has a positive outlook on the spun-out McAfee going public.

"McAfee is well positioned to re-enter the public markets as was the plan when McAfee spun out of Intel in 2017, per the 80% of organizations who, according to ESG research, indicated they would consider buying a significant amount of its cybersecurity technologies from a single enterprise-class cybersecurity vendor," Cahill said. "However, to capitalize on this consolidation opportunity McAfee will need to more aggressively market their device to cloud Mvision product portfolio to stay top of mind in the ever-noisy cybersecurity market."

Parizo said that investors have been "eager" for more IPOs, despite the COVID-19 pandemic.

"With successful tech IPOs of late including Snowflake and JFrog, and security-specific IPOs from last year such as CrowdStrike and Cloudflare, that interest has no signs of slowing. There's no question the McAfee IPO is intended to take advantage of the same favorable market conditions," Parizo said. "While McAfee's future seems brighter than it has in some time, the decision to pursue an IPO should be seen more as a tactical effort to deliver a return for investors when it may be most opportune to do so."

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