Biometric empire building: L-1 Identity Solutions acquires Bioscrypt

Published 15 April 2008

Robert LaPenta’s L-1 has been steadily, methodically pursuing an acquisition campaign which would make the company an identification authentication superpower; latest acquisitions: Bioscrypt and the ID systems business of Digimarc

Stamford, Connecticut-based L-1 Identity Solutions is continuing its steady, methodical campaign to become a one-stop shop for identity needs. The latest move is the acquisition of Toronto-based Bioscrypt (the company has also acquired the ID systems business from Digimarc Corporation for approximately $250 million in stock and cash; we will discuss this second acquisition in a future issue). During the past few years the company also acquired Viisage, Identix, Integrated Biometric Technology, SecuriMetrics, Iridian, SpecTal, ComnetiX, McClendon, and Advanced Concepts. “L-1 is the first true consolidator to emerge in the biometrics and identity space,” says Jeremy Grant, senior vice president and identity solutions analyst at the Stanford Group Company. L-1’s all-stock purchase of Bioscrypt is estimated to cost the company $43.8 million (see HSDW’s first, mid-January report on the acquisiton0. The acquisition will increase L-1’s product offerings in the fingerprint physical access control market. Bioscrypt has more than 400 global customers and an installed base of more than 260,000 access control units. Customers include Kronos, Honeywell, Lenel, and ADI. Identix, one of L-1’s previous purchases, had competed against Bioscrypt in the physical access control markets but exited the market, Grant says. Bioscrypt also has one of four fingerprint scanners which has been approved by the Transportation Security Administration (TSA) for use in airports for access control (see HSDW story). Grant says Bioscrypt’s 3D facial recognition technology is one that has “impressed” him. 3D facial recognition uses infrared light to scan an individual’s face and maps the contours. Theoretically it addresses some of the limitations of standard 2D facial recognition. The Venetian Macao-Resort Hotel has deployed the technology for employee access control. Bioscrypt’s VeriSoft security software is now included on more than twenty million Hewlett-Packard computers.

ContactlessNews’s Jennifer Slattery quotes Matthew Bogart, vice president of marketing at Bioscrypt, to say that the addition should help Bioscrypt expand its product presence. “L-1 helps us advance our business significantly. We will be able to have expanded product offerings beyond just biometrics and multi-factor authentication,” he said. L-1 appears to be setting itself up as an identification super power, but the company still faces some opposition, Grant says. “L-1 faces stiff competition, both from other biometric and identity vendors, as well as from major systems integrators that are in the midst of assembling their own integrated identity platforms,” he says. Grant predicts 23 percent compound annual growth for U.S. government spending on identity systems between fiscal years 2007 and 2009. “Growth in identity and biometrics solutions will be significant over the next ten years as dozens of countries, states and localities implement enterprise-class systems,” he says. “Outside the United States, major projects are going forward in the areas of national ID cards, ePassports and visas, voting, law enforcement and border management.” L-1 has been active with a number of contract wins. The company recorded orders of more than $60 million, including $6.3 million in purchase orders from the Department of State for passport printers, and a $3.7 million deal to modernize Panama’s National and Voter Registration ID system. L-1 declined to be interviewed for this story.