AuthenTec, a leading provider of
smart fingerprint sensors and solutions, announced today that it
has acquired SafeNet, Inc.’s Embedded Security Solutions Division
in a cash and stock transaction which further strengthens
AuthenTec’s offering of security and identity management
solutions.
SafeNet’s
Embedded Security Solutions products are used in hundreds of
millions of communication and network products to ensure data privacy
for businesses and individuals, and are sold to a variety of brand
name customers including HP, Samsung, LG, Ericsson, AMD, Cisco,
Alcatel-Lucent, Juniper Networks, Nokia-Siemens and Texas
Instruments among others. SafeNet’s Embedded Security Solutions
recorded embedded IP and software revenues of $15.5 million in
2009 with gross margins exceeding 90 percent and operating income
margins of over 20 percent (the unaudited results of the business
are subject to adjustment during the audit process). AuthenTec
will also become the exclusive worldwide supplier of SafeNet’s
SafeXcel security processor ICs, representing over $3 million in
incremental sales in 2009. The deal is expected to be accretive to
AuthenTec’s non-GAAP earnings in 2010, after consideration of the
Division’s deferred revenue.
Under terms of the transaction, AuthenTec paid
$8.5 million in cash and issued 1.2 million shares (valued at $2.8
million at the closing) of its common stock. The transaction also
calls for an earn-out of up to $2.5 million in cash based on the
attainment of certain revenue goals for the remainder of 2010.
“This
acquisition continues our transformation from a component supplier
to a more comprehensive source of security, identity management and
touch control solutions. The addition of SafeNet’s Embedded Security
Solutions not only significantly strengthens our offerings in our
existing markets, but also broadens our revenue base,” said
AuthenTec CEO Scott Moody. “By leveraging the expertise of the
SafeNet engineering team in software development, network security
and secure communication, AuthenTec will have the ability to
offer secure end-to-end solutions, from the individual PC or cell
phone all the way to the network server in the cloud. This
acquisition also helps drive additional revenue growth while
improving gross margin and accelerating our return to
profitability.”
Commenting on the acquisition, SafeNet CEO Mark
Floyd stated, “This transaction offers compelling value to
SafeNet’s existing embedded customers, allowing them the
opportunity to extend a secure environment for managing data
security needs beyond the server and network, and directly to the
end-user on either a PC or mobile device. We are extremely pleased
that an industry leader such as AuthenTec will continue to build
on the success of our Embedded Security Solutions team, and we
look forward to working closely with AuthenTec as a strategic
supplier.”
AuthenTec will benefit from the addition of
SafeNet’s highly qualified Embedded Security Solutions staff of
encryption, algorithm, software and silicon design engineers and
its expansive portfolio of software, IP and hardware products.
These include SafeXcel IP Cores (i.e., protocol aware inline
security processing, security packet processing, encryption,
authentication/hashing, public key acceleration, true random number
generation, etc.), QuickSec Embedded Security toolkits, Mobile VPN and
Digital Rights Management (DRM) Fusion Solutions. It also
includes the Division’s 23 U.S. patents as well as additional
foreign patents, bringing AuthenTec’s U.S. portfolio to 144 issued
and pending patents.
AuthenTec will also add SafeNet’s highly regarded
security and encryption IP content and expertise, which aligns
with AuthenTec’s longer term strategy to generate its own IP
licensing revenue. These IP cores will also reduce the Company’s
planned licensed IP expenses.
The Embedded Security Solutions’ team will
continue to operate from engineering locations in the Netherlands
and Finland, while also strengthening AuthenTec’s existing sales
and support locations in Japan, Korea, Taiwan, the U.S., and
Europe. Commenting on the transaction, former SafeNet Managing
Director Dr. Simon Blake-Wilson, now AuthenTec Vice President of
Embedded Security Solutions said, “In discussions last year we
realized the power of combining the world class security
technologies of SafeNet with the leading edge biometric products being
introduced by AuthenTec. Our global team is energized and eager
to pursue the unique opportunities that AuthenTec’s strong
combination of biometrics and encryption will enable.”
