Viisage Buys Identix for $770M
Biometrics market grows up as a major firm in the new industry buys another.
January 12, 2006
In a sign that biometrics is shedding its somewhat flaky reputation, Viisage Technology said Thursday it would pay $770 million for Identix, a maker of face and finger recognition systems.
The combined company said it will focus on selling visas and passports, border control systems, voter programs, and government and corporate identity cards.
From facial recognition systems to so-called secure passports, worldwide spending on biometrics will surpass $4.6 billion by 2008, according to the International Biometric Group.
Analysts say that Viisage’s purchase removes some of the fly-by-night character of the biometrics industry following the rush to deploy new security systems after 9/11. The new company validates the market, and opens up ripe opportunities for biometric startups, said Rob Allen, a financial services research analyst at Frost & Sullivan.
“It signifies that this market is going to happen, and this is not going to be the only technology out there,” Mr. Allen said.
Under the terms of the deal, Identix’s shareholders will receive 0.47 shares of Viisage stock for each Indentix share, representing a nearly 45 percent premium over Identix’s closing price Wednesday. Shares of Billerica, Massachusetts-based Viisage were down 5 percent to $16.80 Thursday while Identix shares rose $1.41, or 24 percent, to $7.19.
While the deal hinges on shareholder approval, it is expected to be completed by the second calendar quarter of 2006.
Startups working on emerging technologies such as body heat recognition systems, gait recognition, and keystroke analysis will benefit as the market matures, a trend reflected in Viisage’s purchase of Indentix, Mr. Allen said.
Viisage, which makes secure documents and identity cards for customers that range from the United States Department of Homeland Security to the Hanover Zoo in Germany, lost $7 million during 2004. Identix lost $14 million during 2005.
Robert V. LaPenta, chairman of Viisage’s board since December, will be CEO of the combined company when the deal is completed. Former Central Intelligence Agency chief George Tenet is on the board of directors.
“The combination of Identix’s advanced multi-biometric search technology with Viisage’s expertise in secure credential, document authentication and verification will create a global leader in biometric security,” Mr. LaPenta said.
The new company will compete against companies like Cogent Systems and Crossmatch. Mr. Allen said more acquisitions were likely to follow in a sign that biometrics is becoming serious business.
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