Contact: Brenon Daly
In both of the largest enterprise IT acquisitions so far this year, the deals are not what they seem. Or more accurately, the target companies were not acquired for what they are. What do we mean? Well, we would posit that Intel didn’t buy McAfee for its core security applications any more than SAP scooped up Sybase for its core database product. Instead, in each case, the buyers really only wanted a small part of the business but found themselves nonetheless writing multibillion-dollar checks for a whole company.
For SAP, the apps giant really wanted Sybase’s mobile technology, essentially using the Sybase Unwired Platform to ‘mobilize’ all of its offerings. It’s nice that the purchase also brought along some data-management capabilities, particularly some pretty slick in-memory database technology. But for SAP, this deal was all about getting its apps onto mobile devices. However, Sybase’s mobile business only generated about one-third of total revenue at the company. So SAP ends up handing over $5.8bn in cash for a business that’s currently running at just $400m.
If anything, Intel is paying even more for the business that it truly wanted – or, at least, the business that’s most relevant – at McAfee: embedded security. Yet that’s only a small (undisclosed) portion of the roughly $2bn revenue at McAfee, the largest stand-alone security vendor. Tellingly, Intel plans to operate as a kind of holding company, letting McAfee continue undisturbed with its business of selling security applications to businesses and consumers.