Major biometrics dealViisage paying $770 million in stock for Identix
Mammoth merger will create one of the largest multi-modal biometrics companies, aiming to become major player in homeland security
Billerica, Massachusetts-based Viisage Technology has paid about $770 million in stock for rival biometrics provider Minnetonka, Minnesota-based Identix for the purpose of creating a full-service homeland security company and gaining a larger share of a market which has grown by leaps and bounds since 9/11. Both companies offer facial-recognition technology, but Viisage lacked Identix’s know-how and presence in fingerprint identification, currently the most commonly used biometric identifier. The combined company, by joining the two companies’ facial recognition methods and integrating them with other biometric systems, will be in a better position to compete for government contracts relating travel security and document verification.
The deal calls for Identix shareholders to receive 0.473 new shares of Viisage for each Identix share. At Wednesday’s closing price of $17.69 a share for Viisage, this would give the Identix shareholders stock worth about $8.37, or a 45 percent premium over Identix’s closing price of $5.78 on Wednesday. Identix shares jumped $1.35, or 23 percent, to $7.13, in midday trading Thursday on the Nasdaq Stock Market, while Viisage shares tumbled $1.42, or 8 percent, to $16.27. The combined company will be based in Stamford, Connecticut and likely will get a new name.
In the twelve month-period before Viisage’s last earnings report, the company lost $9.5 million on revenue of $70.3 million. In the same time frame, Identix lost $10.1 million on revenue of $79.9 million. The companies said their combined operations are expected to have about $220 million in revenue and at least $40 million in earnings before interest, taxes, depreciation, and amortization in 2006. Viisage chairman Robert LaPenta will become chairman and CEO of the new company. The new entity should be profitable by generally accepted accounting methods in the second half of this year, LaPenta said. From there, he pledged, the company can grow at more than 20 percent annually, even without future acquisitions.
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Robert LaPenta
Robert LaPenta’s involvement in the biometric market is good news. LaPenta was a cofounder of defense electronics contractor L-3 Communications where he served as president and CFO. He was also an executive at Loral Corp. In addition to being chairman of the board of Viisage, and chairman and CEO of the merged Viisage-Identix company, he is the chairman, CEO, and founder of L-1 Investment Partners.
LaPenta said the biometrics market today reminded him of the aerospace and defense industry thirty years ago, when scores of entrepreneurial startups were clamoring for cold war defense dollars. Ultimately, he said, many of those companies needed management help “to go to the next level,” a step he hoped to take with Thursday’s deal. He noted that aside from a few biometrics vendors, such as Pasadena, California-based Cogent Systems, “profit is a word that’s not associated with this space. I think we’re going to create a whole new paradigm in that area also,” he said.
LaPenta has his admirers. When asked about the most significant event which had an impact on the biometric market in 2005, Frost & Sullivan’s Rob Allen said that, “First, from my point of view, is the emergence of L-1 Partners. Robert LaPenta has branched off to start L-1 Investment Partners, coming forward with this biometrics only’ investment company. That is huge! It really signifies that biometrics is here and is here to stay so I am definitely glad to see that.”
We also note this: Yesterday, Victor Lee, a biometric maven at New York-based International Biometric Group (IBG), organized a teleconference which examined key biometric events from 2005, and also highlighted critical areas for biometric attention in 2006. One of the topics discussed: “L1 Investment Partners’ entrance into biometrics.” We also note this: Yesterday, Victor Lee, a biometric maven at New York-based International Biometric Group (IBG), organized a teleconference which examined key biometric events from 2005, and also highlighted critical areas for biometric attention in 2006. One of the topics discussed: “L1 Investment Partners’ entrance into biometrics.”
-Allen’s comments were made in this news release
