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The deal, announced Thursday before financial markets opened, is aimed at helping Intel improve the security of its chips by sharpening the software that goes into them. It also opens a new revenue stream for Intel, which will sell security software alongside new chips it is developing for devices such as mobile phones, televisions and even cars. Intel is the No. 1 maker of microprocessors for personal computers and servers.

The $48-per-share offer price represents a 60 percent premium over McAfee's Wednesday close of $29.93 a share. McAfee shares surged $17.08, or 57 percent, to $47.01 on Thursday. Intel shares slipped 69 cents, or 3.5 percent, to $18.96.

Intel, which is based in Santa Clara, Calif., said that security is now a fundamental component of online computing, but that today's approach to security is not adequate for the growing availability of Internet connections on mobile phones, medical devices, ATMs, automobiles and elsewhere.

The industry needs a new approach that combines software, hardware and services to meet tomorrow's needs, the company said.

"With the rapid expansion of growth across a vast array of Internet-connected devices, more and more of the elements of our lives have moved online," Intel chief executive Paul S. Otellini said. "In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences."

McAfee, also based in Santa Clara, is one of the world's largest security technology companies, with about $2 billion in revenue last year.

Otellini said the idea to acquire McAfee grew out of a close collaboration that has been going on for a year and a half, one that will result in unspecified products reaching the market next year.

Intel is an infrequent acquirer with a history of dabbling in, and retreating from, markets outside its core business of building computer microprocessors.

But Intel has been persistent in trying to expand into the market for the guts of smartphones and other Internet-connected wireless devices. And buying McAfee will help it secure those devices from malicious software and other computing threats.

Intel said the deal will hurt earnings slightly in the first year the companies are combined. Excluding costs and other one-time items related to the acquisition, Intel predicts the deal will slightly boost earnings next year and improve after that.

Both companies' boards of directors have unanimously approved the deal. The deal still requires approval from regulators and McAfee shareholders.

-- Associated Press