PARIS, September 20, 2010 /PRNewswire-FirstCall/ --
Safran (NYSE Euronext Paris: SAF) announced today that it has
entered into a definitive agreement with L-1 Identity Solutions
(NYSE: ID), a leading identity management provider in the United States, for Safran to acquire the
operating and holding company of L-1 and its biometric and
enterprise access solutions, secure credentialing solutions and
enrollment services businesses, for a total cash amount of
USD 1.09 billion. These businesses
had 2009 revenue of USD 436 million
and recorded a backlog of USD 1.1
billion at end of 2009. The transaction would create an
industry-leading provider of solutions for the fast-growing
high-tech homeland security market and generate strong growth in
revenue and earnings, while yielding significant operating
synergies.
Prior to this agreement and as a condition to the transaction,
L-1 entered into a definitive agreement to sell its government
consulting services business for USD 295
million to a third party, and therefore this business would
be excluded from the transaction with Safran.
Overview of the transaction
Under the terms of the agreement with L-1, Safran would acquire
100 % of L-1's shares, with the following characteristics:
- L-1 shareholders would receive USD 12.00 per L-1 share in
cash, an implied premium of 31.2 % over L-1's 30-day average closing
price of USD 9.14 for the period ending on September 17 2010;
- The estimated Enterprise Value of the business acquired by
Safran is USD 1.19 billion, taking into account L-1's estimated net
debt at closing of approximately USD 100 million which includes the
cash proceeds from the prior sale of the government consulting services
business;
- The run-rate operating cost synergies are expected to
represent approximately USD 30 million, which would be fully realized
within 18 months from the closing of the transaction;
- The transaction, thanks to operating synergies, is expected
to be accretive to Safran's earnings from year one, excluding non cash
and one-off items and purchase accounting adjustments (PPA);
- Safran intends to fully finance the acquisition with
existing cash on hand; and
- The boards of directors of both L-1 and Safran have
unanimously approved the transaction.
Creates an industry-leading provider of solutions for hightech
homeland security
Following the closing, Safran intends to operate L-1 as part of
its existing security business, Morpho, in accordance with US
national security regulation, to create an industry-leading
provider of solutions for high tech homeland security. Benefits
would include:
- A highly complementary combination of security technology and products
that would offer enhanced ID solutions with best-of-class products in
all their offerings;
- A combination of the best ID management solutions and
detection of illicit and dangerous materials providing an offer of the
highest standards for travel security;
- A broad geographical fit with balanced operations in around
40 countries and approximately Euro 1.35 billion in 2009 pro-forma[1]
revenue (comprised of USD 436 million from L-1's businesses);
- A combination of outstanding teams, that would share a
strategic vision and be positioned to address the high growth and
attractive potential of global biometric and identity management
requirements; and
- A combination of deep experience from both firms in serving
in the United States and elsewhere, with the highest standards of
quality, high profile public and governmental customers.
Commitment to U.S. stakeholders
With more than 4,000 employees working at 40 locations across 18
states, Safran's sales to U.S. customers represented approximately
Euro 2.5 billion in 2009 revenue. It
should be noted that CFM International, founded in 1974, is a
company equally-owned by Safran and GE and the most successful
venture in the history of civil aviation. The two companies agreed
in 2008 to extend their cooperation until 2040. Safran is a long
standing and trusted partner, having served for decades a large
spectrum of key contributors to the U.S. economy such as Boeing,
Lockheed Martin, as well as eight out of the ten largest U.S.
airlines and notable U.S. government agencies, including the U.S.
Armed Forces (the Army, Navy, Air Force, Marine Corps and Coast
Guard), the FBI, a significant number of law enforcement
organizations and entities in U.S. cities and states, and the U.S.
Transportation Security Administration - among others. L-1 would
benefit from Safran's technology, extended geographical reach,
financial and management capabilities to further assist the company
in accelerating the growth of its strong business in the United States and expansion in global key
territories.
This transaction builds on Safran's previous successful
transactions in 2009 in this sector in the
United States: the acquisitions
of Motorola's Printrak biometrics business (merged with Morpho US
biometrics activities to become MorphoTrak) and of GE's Homeland
Protection unit[2] (rebranded Morpho Detection). The combined
activities of Morpho and L-1[3] would have generated 2009 pro forma
sales to U.S. customers of more than USD 700
million with around 2,200 employees in the United States.
Following this transaction, Safran would continue to strengthen
the combined R&D teams. In doing so, the companies expect to
build the next generation of excellence in biometrics and ID
management and enhance the combined group's competitiveness in all
territories, for the benefit of customers.
Jean-Paul Herteman, Chief
Executive Officer of Safran, said: "I have a deep respect for L-1's
business and its contribution to the security industry. We are all
highly impressed with the quality and expertise of L-1's teams
throughout the United States and
we are looking forward to working with them to bring L-1 and Morpho
together. This will allow us to grow L-1's business, while
expanding the reach of L-1's services to other key territories
around the world. With this acquisition, Safran's pro forma 2011
revenues from its security business, focused on detection,
biometrics and identity management is likely to exceed 15% of the
Safran's global revenue. The expected organic growth of these
activities should enable the group to reach its 20% revenue target
for its security business swiftly. Furthermore, this constitutes a
significant step in the implementation of Safran's clearly defined
strategy to be a leader in the field of mission critical high tech
tier one players in the group's three businesses: Aerospace,
Defence and Security."
"I am extremely proud of L-1's accomplishments and the role we
have played in the development of multi-modal biometric
technologies and in helping establish the identity management
market over the last four years," said Robert V. LaPenta, Chairman, President and CEO
of L-1 Identity Solutions. "Safran will provide a strong global
reach and a more comprehensive portfolio of solutions and services
in order to leverage the industry's best set of collective
experience and solutions, all to the benefit of our customers and
partners worldwide. Safran's commitment to furthering the standards
of quality and excellence in engineering innovation will ensure
that we can continue to lead the market in developing superior
identity management solutions."
The transaction is subject to L-1' shareholder and regulatory
approvals, including review by the U.S. Antitrust Authorities, the
Committee on Foreign Investment in the
United States (CFIUS), as well as the satisfaction of other
customary closing conditions.
RBC Capital Markets Corporation and Societe Generale Corporate
and Investment Banking are acting as joint financial advisors and
Weil, Gotshal, Manges and Kaye
Scholer are acting as international legal counsels to
Safran. The Chertoff Group is serving as a strategic advisor to
Safran. The complete terms and conditions of the agreement will be
filed with the U.S. Securities and Exchange Commission.
Safran will host a conference call today open to analysts and
journalists at 9:00 am CET which can
be accessed at +33-1-72-00-09-82 from France, +44-207-107-1613 from the U.K. and
+1-866-907-5923 from the US. A replay will be available at
+33-1-72-00-15-00 (access code 270935#).
The press release and the presentation are available on the
website at http://www.safran-group.com.
About Safran
Safran is a leading international high-technology group with
three core businesses: Aerospace (propulsion and equipment),
Defence and Security. Operating worldwide, the Safran group has
55,000 employees and generated sales exceeding 10.4 billion euros in 2009. Working alone or in
partnership, Safran holds world or European leadership positions in
its core markets. The Group invests heavily in Research &
Development to meet the requirements of changing markets, including
expenditures of 1.1 billion euros in
2009. With a market capitalization of approximately USD 10 billion, Safran is listed on NYSE Euronext
Paris and its share is part of the SBF 120 and Euronext 100
indexes.
For more information: http://www.safran-group.com
About Morpho
Morpho, a high-technology company in the Safran group, is one of
the world's leading suppliers of identification, detection and
e-document solutions. Morpho is specialized in personal rights and
flow management applications, in particular based on biometrics, a
sector in which it is the world leader, as well as secure terminals
and smart cards. In the US, Morpho develops various biometric
technologies for both law enforcement and civil agencies such as
New York State Division of
Criminal Justice Services, U.S. Drug Enforcement Agency,
New York Police Department Central
Records Division, FBI Latent Laboratory, FBI Criminal Justice
Information Services, U.S. Army Crime Lab.
For more information: http://www.morpho.com
About L-1
L-1 Identity Solutions, Inc. (NYSE: ID) protects and secures
personal identities and assets. Its divisions include Biometrics /
Enterprise Access and Secure Credentialing solutions, as well as
Enrollment and Government Consulting services. With the trust and
confidence in individual identities provided by L-1, international
governments, federal and state agencies, law enforcement and
commercial businesses can better guard the public against global
terrorism, crime and identity theft fostered by fraudulent
identity. L-1 Identity Solutions has more than 2,200 employees
worldwide and is headquartered in Stamford, CT.
For more information, visit http://www.L1ID.com
Disclaimers
These documents contain forward-looking statements. All
statements other than statements of historical fact in this
presentation, including, without limitation, those regarding our
financial position, business strategy, management plans and
objectives for future operations, are forward-looking statements.
These forward looking statements involve known and unknown risks,
uncertainties and other factors, which may cause our actual
results, performance or achievements, or industry results, to be
materially different from those expressed or implied by these
forward-looking statements. These forward-looking statements are
based on numerous assumptions regarding our present and future
business strategies and the environment in which we expect to
operate in the future. Important factors that could cause our
actual results, performance or achievements to differ materially
from those in the forward-looking statements include, among other
factors:
- the cyclical nature of the businesses;
- the effects of exceptional and unpredictable events;
- the impact of competition and regulations;
- fluctuations in exchange rates;
- our ability to maintain high levels of technology.
Forward-looking statements speak only as of the date of this
presentation and we expressly disclaim any obligation or
undertaking to release any update or revisions to any
forward-looking statements in this presentation as a result of any
change in our expectations or any change in events, conditions or
circumstances on which these forward-looking statements are
based.
[1] Safranos security business (including annualized Morpho Detection
(formerly GE HLP) and MorphoTrak (formerly Printrak) businesses) and
Laser biometric and enterprise access solutions, secure
credentialing solutions and enrollment services businesses
[2] Morpho Detection is co-owned by Safran (81% stake) with GE (19%
stake)
[3] Excluding the government consulting services business, to be sold
prior to the acquisition
SOURCE SAFRAN