Management & Strategy

McAfee Acquisition: Analysts, Yea. Lawyers, Nay.

Do these firms really care about McAfee shareholders, or is this just an attempt to rake in some cash for the firms themselves?

Intel, the world’s largest computer chipmaker, will pay $48 per share in cash for McAfee – a whopping 60 percent premium over McAfee’s $29.93 closing price on Wednesday, and one that’s in line with other recent valuations in software and tech deals.

<p style="text-align: center;"><em>Do these firms really care about McAfee shareholders, or is this just an attempt to rake in some cash for the firms themselves?</em></p><p><strong>Intel</strong>, the world’s largest computer chipmaker, will pay $48 per share in cash for <strong>McAfee</strong> – a whopping 60 percent premium over McAfee's $29.93 closing price on Wednesday, and one that’s in line with other recent valuations in software and tech deals.</p>

Do these firms really care about McAfee shareholders, or is this just an attempt to rake in some cash for the firms themselves?

Intel, the world’s largest computer chipmaker, will pay $48 per share in cash for McAfee – a whopping 60 percent premium over McAfee’s $29.93 closing price on Wednesday, and one that’s in line with other recent valuations in software and tech deals.

Apparently several law firms don’t think the $7.68 billion it adds up to is enough. Within hours of the announcement of the proposed acquisition, lawyers were foaming at the mouth, preparing to conduct investigations for possible class action lawsuits.

As of Thursday night, SecurityWeek was able to identify no fewer than eight law firms conducting such investigations:

• Bernstein Liebhard LLP

• Goldfarb Branham Law Firm LLP

• Kendall Law Group

• Law Offices of Howard G. Smith

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• Ryan & Maniskas

• The Briscoe Law Firm, PLLC

• Powers Taylor, LLP

• The Law Office of Robbins Umeda LLP

Ostensibly, these firms are acting in the name of “shareholder rights.” Others might argue they are the business world’s equivalent to ambulance chasers.

The firms are investigating “possible breaches of fiduciary duty” and looking to see if McAfee properly shopped itself before agreeing to the deal, which includes a $230 million termination fee if McAfee backs out and takes a better offer.

“Because at least one analyst has set a price target of $50.00 per share, this deal could be unfair to shareholders,” said securities lawyer Hamilton Lindley of Goldfarb Branham LLP in a public statement. “Additionally, the deal has been locked up by a no-solicitation provision and a $230 million termination fee. Our proposed class action lawsuit seeks better value for the company as well as more information about this transaction disclosed to shareholders.”

A majority of the money-chasing firms were quick to point out that at least one analyst had a price target of $50.00. Fair enough. But if these firms are truly basing their decision to investigate and consider class-action suits on analysts’ price targets, they would actually be cheering for the deal.

Our research shows the following price target data, prior to yesterdays proposed acquisition:

Mean Target: $42.92

Median Target: $43.00

High Target: $50.00

Low Target: $33.00

(Thompson/First Call – Number of Brokers: 25)

Wall Street, analysts and most of the shareholders we have spoken with think it’s a good deal for MFE shareholders.

In an interview on Bloomberg Television, T. Rowe Price portfolio manager Ken Allen said, “Certainly a 60 percent premium is a very large one” and stated, “This is a good outcome for McAfee shareholders.”

Jared Dillian, former trader for Lehman Brothers and now Editor of The Daily Dirtnap, a newsletter for professional investors offering a mix of comedy and insightful market commentary, thinks positively of the deal. “I don’t care what you say, I think INTC/MFE is a good deal,” Dillian wrote in today’s newsletter.

And let’s not forget, shareholders will still have a chance to vote on the deal.

In the light of all this, we have to ask, do these firms really care about McAfee shareholders, or is this just an attempt to rake in some cash for the firms themselves?

We contacted all the firms listed above for comment Thursday evening and have not heard back from a single one as of 4:00 PM EDT Friday afternoon.

Was this a good deal for McAfee shareholders? Voice your thoughts and opinions in the comments below.

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