Intel hopeful McAfee deal to close in first half

BOSTON/BRUSSELS Wed Jan 5, 2011 5:23pm EST

Workers clean a display at the Intel booth in preparation for the 2011 International Consumer Electronics Show (CES) at the Las Vegas Convention Center in Las Vegas, Nevada January 4, 2011. REUTERS/Steve Marcus

Workers clean a display at the Intel booth in preparation for the 2011 International Consumer Electronics Show (CES) at the Las Vegas Convention Center in Las Vegas, Nevada January 4, 2011.

Credit: Reuters/Steve Marcus

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BOSTON/BRUSSELS (Reuters) - Intel Corp (INTC.O) is hopeful that its acquisition of McAfee Inc MFE.N will close in the first half of this year, as a deadline for making concessions on the deal approached.

"We just continue to work with the EU," Intel spokesman Chuck Mulloy said in a telephone interview.

The commission is concerned that Intel might embed certain elements of McAfee's virus-fighting technology in its widely used microprocessor chips for personal computers, giving it an unfair advantage over rivals, according to the two people familiar with the case.

Intel has until midnight Brussels time (6 p.m. New York time on Wednesday) to present concessions to EU regulators, who have expressed concerns about the $7.7 billion acquisition, which would be Intel's biggest and was announced in August.

Mulloy declined to say whether Intel would offer such concessions by the time that deadline expired.

The commission has until January 12 to give the deal a quick clearance. Otherwise it would be subject to a lengthy antitrust review that could take months and risk killing the deal altogether.

If Intel doesn't offer anything before the Wednesday deadline passes, the Commission could open an in-depth second-stage investigation for up to 90 working days.

"Without remedies, Intel would have a problem. There are significant risks of the Commission blocking the deal," said one of the people familiar with the case.

Intel's plan to buy McAfee, the world's No. 2 purveyor

of anti-virus software after Symantec Corp (SYMC.O), underscores how security has become a concern in a world of Web-enabled devices. Swallowing McAfee would give Intel the opportunity to sell high-profit security software alongside its microprocessors to its traditional PC customers.

Analysts say Intel could differentiate its processors by, for instance, designing chips that speed up the security scans typically performed by McAfee software, or creating technology that makes gadgets less vulnerable to attacks by hackers.

European regulators are concerned that doing so might create an unfair advantage for Intel over rivals such as Symantec, according to the people familiar with the case.

(Reporting by Jim Finkle and Foo Yun Chee; Editing by Steve Orlofsky, Bernard Orr)

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