Oberthur owner Advent to buy Safran's identity and security business
A major hurdle has been cleared in the Morpho acquisition by U.S. private equity firm, Advent International. The European Union antitrust regulators approved the acquisition of Morpho, the biometrics and security operations of the French aerospace company Safran.
The approval is conditional on the sale of Morpho’s payment smart card business in France, but Advent already announced plans to divest of the group in question, CPS Technologies. Morpho had acquired CPS from American Banknote back in 2012.
According to the EU commission, “the investigation found that for payment smart cards, the proposed transaction, as initially notified, would have significantly reduced competition in the market for payment smart cards in France. This market is particularly difficult to enter, reducing the ability of suppliers not currently active in France to compete effectively.”
The barriers to entry are significant because in order to supply payment cards in France, manufacturers must be certified for the domestic debit card scheme Cartes Bancaires, and to be competitive, they must operate a certified manufacturing site for card personalization in the country. Thus, the regulators forced the sale of CPS to ensure competition was not stifled for domestic payment cards.
Following successful completion of that divestiture, however, “the Commission concluded that the proposed transaction, as modified, would not significantly reduce competition.”
Last fall, Safran began exclusive talks with Advent following prior discussions that had shortlisted Advent, Gemalto, Bain Capital, and two other investment groups, CVC and KKR.
The sale of the Morpho identity and security business to Advent is significant in part because the firm also owns smart card and identity industry stalwart, Oberthur Technologies.
The reported sale price is valued at $2.7 billion. Both development and production would reportedly remain in France.
According to a Reuters report, the Morpho acquisition will complete Safran’s refocusing on core aerospace business lines, as it previously sold its explosives detection business, Morpho Detection, to Britain’s Smiths Group.