L-1 Identity Solutions, Inc. has entered into a definitive agreement with Bioscrypt Inc., to acquire all outstanding Bioscrypt shares in a stock-for-stock transaction. L-1 will purchase Bioscrypt shares for C$0.55 per share, representing a total purchase price of approximately C$44.0 million. Bioscrypt is expected to add $20.0 million in revenue in 2008. The acquisition is expected to close in the first quarter of 2008. Following the close of the acquisition, it is expected that Bioscrypt will continue to operate from its current location(s). Bioscrypt will become a wholly-owned subsidiary of L-1 Identity Solutions.
L-1 Identity Solutions to Acquire Bioscrypt in a Stock-for-Stock Transaction
L-1 Identity Solutions Expands into Physical and Logical Access Control and Strengthens Presence in the Commercial Sector
STAMFORD, CT. — L-1 Identity Solutions, Inc. has entered into a definitive agreement with Bioscrypt Inc., the leading provider of enterprise access control solutions headquartered in Ontario Canada, to acquire all outstanding Bioscrypt shares in a stock-for-stock transaction. The acquisition reinforces L-1’s strategic vision to expand its market leadership into physical and logical access control. Furthermore, it dramatically increases the Company’s presence in complementary commercial markets, including transportation, banking / finance and healthcare.
Under the terms of the definitive agreement, L-1 will purchase Bioscrypt shares for C$0.55 per share, representing a total purchase price of approximately C$44.0 million. Subject to certain conditions, the number of L-1 shares to be issued in payment of the purchase price for the Bioscrypt shares is based on the average closing price of L-1 shares on the New York Stock Exchange for the 20 trading days ending five trading days prior to the closing date of the acquisition. L-1 estimates that it will issue approximately 2.5 million shares in connection with the acquisition. Under the definitive agreement, the maximum number of L-1 shares that can be issued is 2.6 million shares. In addition, L-1 will assume outstanding Bioscrypt stock options that are not exercised prior to the effective time of the acquisition. Additional terms of the transaction will be more fully described in the management proxy circular to be mailed by Bioscrypt to its security holders in connection with a special meeting of its security holders. Today, following announcement of the Bioscrypt transaction, L-1 intends to acquire approximately 500K-750K shares of L-1 common stock in an arranged transaction.
Bioscrypt is expected to add $20.0 million in revenue and be Adjusted EBITDA neutral in 2008. It is expected to be Adjusted EBITDA accretive in 2009. The current Bioscrypt business base accounts for 85 percent of its calendar 2008 projected revenue. Bioscrypt has experienced strong growth in recurring sales within its existing customer base and the acquisition will provide significant new cross-selling opportunities between the two companies’ partners and customers. In addition, the companies will implement a restructuring plan to generate cost savings through synergies.
“With this acquisition, L-1 strengthens its leadership position in protecting and securing personal identities and assets by extending into access control, a market that is expected to grow substantially,” said Robert V. LaPenta, Chairman, President and CEO of L-1 Identity Solutions. “In line with our strategy to acquire the best-in-class solutions, Bioscrypt is a leader in advanced physical and logical biometric access control solutions and brings new and unique technological capabilities to our portfolio of identity management solutions, including three-dimensional facial recognition.”
The acquisition is structured as an arrangement under the Canada Business Corporations Act and is expected to close in the first quarter of 2008. The acquisition is subject to the satisfaction of a number of customary conditions, including approval by the holders of at least two-thirds of Bioscrypt’s outstanding common shares, options and warrants, each voting as a separate class, the approval of the Ontario Superior Court, and other regulatory approvals. The acquisition will be submitted to Bioscrypt security holders for approval at a special meeting expected to be held in February 2008. The Board of Directors of Bioscrypt has unanimously recommended that Bioscrypt security holders vote in favor of the acquisition.
Irrevocable support agreements in favor of the transaction have been signed by directors, officers and other shareholders of Bioscrypt, representing approximately 25 percent of the outstanding shares of Bioscrypt. Similar agreements have been signed by the holders of more than 87 percent of all of Bioscrypt issued and outstanding warrants and 70 percent of all outstanding stock options.
The world market for electronic physical access control is expected to be $2.1 billion in 2008, of which, biometric based products currently represent approximately 10 percent. In it, Bioscrypt is transforming how organizations are bridging the gap between physical and logical access to create secure working environments. Its hardware and software solutions deliver strong authentication processes to facilities, equipment, IT networks and computer applications and allow organizations to administer unified identity access policies across the enterprise. Bioscrypt solutions include multi-factor authentication readers featuring fingerprint or 3D face biometric matching for facility access, embedded solutions for integration of biometrics into products designed by Original Equipment Manufacturers (OEMs), Single Sign On and network logon software for IT security and technology licensing of patented algorithms.
“L-1 is the clear leader in providing customized solutions that meet the rigorous demands of the world’s most sophisticated consumers of identity management technologies,” said Robert M. Douglas, President and Chief Executive Officer of Bioscrypt. “Bioscrypt’s logical and physical access products are an important component of this strategy and we believe our customers will benefit tremendously from the deep expertise and broad range of solutions and services now afforded to them through L-1.”
Bioscrypt has over 400 global customers and an installed base of over 260,000 access control units. Significant customers include Kronos, Honeywell, Lenel and ADI, among others. In addition, Bioscrypt’s VeriSoft software application is now included on more than 20 million HP computers and its 3D facial recognition, acquired as part of the A 4 Vision acquisition, is used by the largest casino in the world to provide access control for over 12,000 employees.
“Bioscrypt is the market leader among biometric physical access providers and its substantial sales channel is a valuable asset through which L-1 can extend the reach of its solutions,” added Lapenta. “Bioscrypt is well-positioned within the government and transportation markets. It also has a strong presence within the corporate enterprise market where we see great potential as corporations begin to embark on large-scale identity management deployments globally.”
Following the close of the acquisition, it is expected that Bioscrypt will continue to operate from its current location(s). Bioscrypt will become a wholly-owned subsidiary of L-1 Identity Solutions.
About L-1 Identity Solutions
L-1 Identity Solutions, Inc., together with its portfolio of companies, offers a comprehensive set of products and solutions for protecting and securing personal identities and assets. Leveraging the industry’s most advanced multi-modal biometric platform for finger, face and iris recognition, our solutions provide a circle of trust around all aspects of an identity and the credentials assigned to it – including proofing, enrollment, issuance and usage. With the trust and confidence in individual identities provided by L-1 Identity Solutions, government entities, law enforcement and border management agencies, and commercial enterprises can better guard the public against global terrorism, crime and identity theft fostered by fraudulent identity. L-1 Identity Solutions is headquartered in Stamford, CT. For more information, visit http://www.L1ID.com.