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Announcement: Moody's says McAfee's Enterprise business divestiture is credit neutral; ratings unaffectedGlobal Credit Research - 10 Mar 2021New York, March 10, 2021 -- Moody's Investors Service ("Moody's) said McAfee, LLC's ratings, including the B1 Corporate Family Rating ("CFR"), and stable outlook are not affected at this time by the announced divestiture. On 8 March 2021, McAfee Corp. ("McAfee", the ultimate parent of McAfee, LLC) disclosed that it has entered into a definitive agreement to sell its Enterprise business to a consortium led by Symphony Technology Group ("STG") for $4.0 billion and use a portion of the proceeds to reduce debt. The transaction is expected to close by the end of 2021.McAfee plans to use proceeds from the divestiture to repay approximately $1 billion of debt, issue a $2.75 billion special dividend to shareholders, and fund transaction and separation expenses, and capital gains taxes. The transaction is expected to be relatively leverage neutral excluding one-time costs and stranded costs. Pro forma for the transaction and debt paydown, run rate leverage is estimated around 6x excluding one-time costs and under 5x further excluding ongoing stranded costs. McAfee expects stranded costs to wind down over the next two years. Moody's treats stock-based compensation as an expense in leverage calculations.While the divestiture will reduce McAfee's diversification, it will also separate the challenged Enterprise business, which has struggled to grow with much lower margins than the rest of the company amidst a difficult competitive environment. The remaining consumer business should achieve high single digit or better growth assisted by increasing concerns over cyber security risks and the shift to remote work. However, free cash flow generation for the remaining company will likely remain pressured driven by stranded costs, taxes, distributions to pre-IPO LLC holders as well as an estimated $200 million in annual dividends. Moody's calculates free cash flow as cash flow from operations less capital expenditures less distributions to equity holders.Moody's views the partial use of divestiture proceeds to repay debt as an indication of a more balanced financial policy. Financial policy has become much less aggressive since McAfee's IPO in October 2020. Intel and private equity firms, TPG, Thoma Bravo and GIC still control around 90% of voting shares and retain the ability to appoint the majority of Board members.This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. Matthew B. 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