US computer chip maker Intel is to buy McAfee, which produces security software, in a cash deal worth $7.68bn (£4.9bn), or $48 a share.
Intel is aiming to boost its security offerings
The share price was a 60% increase compared with what the McAfee stock closed at on Wednesday - $29.93.
Intel said security was now a "fundamental component of online computing" as it tries to boost its offerings in this area.
The chip maker said the deal would reduce earnings slightly in the first year that the companies, who are both based in Santa Clara, California, are combined.
McAfee makes security software
But excluding costs and other one-time items related to the acquisition, Intel predicted the takeover would slightly boost earnings next year and improve after that.
McAfee shares surged 58% after the takeover was announced to hit $47.42, while Intel shares slipped 2.5% to $19.11.
Both boards of directors have unanimously approved the deal, but it still requires McAfee shareholder approval and regulatory clearances.
Founded in 1987, McAfee is one of the world's largest security technology companies with about $2bn in revenue last year.
Analyst Vijay Rakesh said: "It's a fairly big acquisition for Intel. I think they're probably trying to build up their software side.
"It looks like Intel is trying to get from the hardware to the services side of the business so it will be interesting to see how that goes."
He added: "I think people were probably (expecting) some smaller acquisitions from Intel, it's definitely - even by Intel's standards - a pretty big acquisition for them.
"It definitely seems to be a pretty high premium in this environment."
Intel is aiming to boost its security offerings
The share price was a 60% increase compared with what the McAfee stock closed at on Wednesday - $29.93.
Intel said security was now a "fundamental component of online computing" as it tries to boost its offerings in this area.
The chip maker said the deal would reduce earnings slightly in the first year that the companies, who are both based in Santa Clara, California, are combined.
McAfee makes security software
But excluding costs and other one-time items related to the acquisition, Intel predicted the takeover would slightly boost earnings next year and improve after that.
McAfee shares surged 58% after the takeover was announced to hit $47.42, while Intel shares slipped 2.5% to $19.11.
Both boards of directors have unanimously approved the deal, but it still requires McAfee shareholder approval and regulatory clearances.
Founded in 1987, McAfee is one of the world's largest security technology companies with about $2bn in revenue last year.
Analyst Vijay Rakesh said: "It's a fairly big acquisition for Intel. I think they're probably trying to build up their software side.
"It looks like Intel is trying to get from the hardware to the services side of the business so it will be interesting to see how that goes."
He added: "I think people were probably (expecting) some smaller acquisitions from Intel, it's definitely - even by Intel's standards - a pretty big acquisition for them.
"It definitely seems to be a pretty high premium in this environment."