Revisiting Rumors of McAfee Acquisition by HP

Continuing to buzz if not exactly roar, rumors of a potential acquisition by Hewlett-Packard of McAfee persist.

Over at the Forbes website, Charlotte Dunlap of Synergy Research Group makes a compelling argument as to why HP should be giving serious consideration to a McAfee buy.

Is the latter open to such an offer? Presuming the price is right, I believe so.

One challenge is that, as an acquisition target, McAfee is relatively rich at the moment, trading close to its 52-week high with a market capitalization of approximately $6.96 billion. Still, as Dunlap contends, McAfee offers nearly everything HP would require to provide embedded, end-to-end security solutions to its enterprise clientele.

The question for HP is whether it could adroitly execute a post-acquisition integration of McAfee. It just might work, and one can readily understand HP’s motivation, but there’s an inverse relationship between the size of an acquisition and its probability of ultimate success as a business proposition.

There are good reasons why companies such as Cisco Systems refrain from big acquisitions. HP merely has to look back at the vexatious post-acquisition experiences it had with Apollo in technical workstations and — on a larger and more problematic scale — Compaq in the PC space.

McAfee would not represent an acquisition on that scale, but it’s a big enough meal to warrant forethought about potential indigestion. Such a move would require not only standard due-diligence procedures regarding the acquisition candidate, but also plenty of preparation regarding the disposition and integration of assets.

If an acquisition is in the works, the lengthy rumor trail could suggest that much discussion and considerable work have been occurring behind the scenes. Or, more darkly, the rumors might be traced to individuals with ulterior motives of one sort or another.


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