Updates to this story
In what seems at first like an odd move, Intel said it had acquired McAfee for $7.68 billion.
Intel will fold McAfee into its software unit and said the reason it had bought the company was because security is a fundamental part of online computing.
Billions of internet devices from cars, ATMs to presumably washing machines need proper security at the hardware, software and network level, Intel said.
Intel has paid over the odds for McAfee - it's buying the shares at $48 per cash, a premium of 60 percent over the share price of the AV firm.
Paul Otellini, president and CEO of Intel, said security will become the third pillar of what people want from computing - the other two being energy efficient performance and connectivity.
Renee James, who manages the Intel software and services group, said: "Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow. This acquisition is consistent with our software and services strategy to deliver an outstanding computing experience in fast-growing business areas, especially around the move to wireless mobility.”
McAfee reported $2 billion in revenues for its financial 2009. The acquisition will be subject to regulatory approval. Intel filed a report with the SEC, here.
* Meanwhile, in a somewhat surreal press release, McAfee named Cameron Diaz as the most dangerous celebrity on the web.