Safran bid for Digimarc Division challenges L-1
24 Jun 2008
Europe's second-largest defense-electronics maker Safran SA has offered to buy Digimarc Corp.'s identification-systems unit for $300 million in cash, and in the process has challenged a bid by L-1 Identity Solutions Inc.
In a statement, Paris-based Safran said the purchase will strengthen the Sagem Securite division, maker of biometric identification equipment like fingerprint scanners and smart cards.
Analysts say that it is a ''smart strategy'' as it strengthens the company in biometry and secure solutions, which is already an area of strength for Safran, and is seeing fast-growing demand.
On 24 March, L-1 had said that it agreed to acquire the Digimarc division for around $250 million in stock and cash. L-1 was looking to complete the acquisition this year.
In response to Safran's unsolicited bid, the Beaverton, Oregon-based Digimarc said a day ago that it could consider the French company's offer over L-1's proposal.
L-1 too has acknowledged that Safran's bid "provides superior value to Digimarc's stockholders." However, L-1 continues to hold its acquisition agreement with Digimarc as remaining in effect, saying that Digimarc is not entitled to terminate the contract unless its board formally announces the competing bid as a superior proposal. That announcement will trigger a five-day negotiating period.
Taking over Digimarc's division will also add to Safran's operations in the US. The company is seeking to expand in the US market in a bid to negate the negative effects of the declining dollar against the euro.
Digimarc product line up includes technology for embedding holograms in US driver's licenses and cards embedded with microchips. The company is also known to be working with New York-based Nielsen Co., a US television ratings company, on a project to prevent illegal use of copyrighted videos on the Internet.
Safran was formed in the May 2005 out of a merger of Snecma SA, the world's third-biggest maker of commercial-aircraft engines, and Sagem SA, the second-largest French defense- electronics company. The company separated its military and civilian security operations into two divisions in July 2007, and is expected to announce a strategy for its unprofitable mobile-telephone unit next month.
