INSIDE Secure to acquire Embedded Security Solutions (ESS), a security specialist in the mobile and networking markets

  INSIDE Secure to acquire Embedded Security Solutions (ESS), a security
  specialist in the mobile and networking markets

  *Reinforces INSIDE Secure’s leadership as a key player in the fast-growing
    security solutions market
  *Cross-selling opportunities with complementary portfolio of solutions
  *Good fit with INSIDE Secure’s Mobile NFC and Digital Security businesses
  *Transaction valued at up to USD48 million, paid in cash
  *Transaction expected to be accretive to 2013 adjusted^1 operating and net

Business Wire

AIX-EN-PROVENCE, France -- November 19, 2012

Regulatory News:

INSIDE Secure  (NYSE Euronext INSD.PA) today announced that it has entered
into an agreement to purchase Embedded Security Solutions (ESS), a high
expertise business which designs and develops encryption-related security
hardware intellectual property (IP) and software for a variety of industries,
including the mobile and networking markets. The transaction is expected to
close before the end of 2012 subject to certain customary closing conditions.
The Supervisory Board of INSIDE Secure has unanimously approved the

This strategic acquisition will enable INSIDE Secure to reinforce its position
as a key player in the fast-growing security solutions market:

  *ESS brings to INSIDE Secure complementary offerings for a complete
    security architecture, as well as additional solutions for securing both
    content (Digital Rights Management or “DRM”) and data exchange (Virtual
    Private Network or “VPN”);
  *ESS complements INSIDE Secure’s know-how with a talented team of 79 highly
    qualified employees located in Europe, Asia and in the US, as well as its
    extensive and highly regarded security intellectual property and
    technology portfolio, which aligns with INSIDE’s long-term strategy to
    generate its own IP licensing revenue;
  *This acquisition will allow INSIDE Secure to access a wider customer base
    in the mobile, content provider and network industries that serve a
    variety of application markets (smart grids, automotive, gaming and
    others); and
  *By leveraging the strong capabilities of INSIDE Secure’s existing Mobile
    NFC and Digital Security businesses, the combined offer should lead to
    additional sales in high growth markets.

At closing, INSIDE Secure will pay USD38 million in cash subject to a working
capital adjustment, and up to an additional USD10 million subject to
completion of certain post-closing transactions. The transaction is expected
to be accretive to INSIDE Secure’s 2013 adjusted operating and net results,
and to enhance INSIDE Secure’s gross margin.

Commenting on this announcement, Rémy de Tonnac, chief executive officer of
INSIDE Secure, said: “This transaction is an important opportunity to extend
our position in the security value chain and reinforce our global offer in
high-end security solutions. It will enable us to complement our product and
solution portfolio in Mobile NFC and Digital Security and enhance our customer
offerings in fast- growing markets. The talented ESS team who will be joining
will contribute their know-how and expertise to advancing our innovative
technologies, and help us address new security markets.”

Overview of ESS know-how, products and expertise

ESS designs, develops and sells a range of embedded security solutions,
encompassing hardware IP and software. It offers a host of security solutions
tailored for businesses and consumers on the move.

The ESS portfolio offer includes a comprehensive suite of embedded security
solutions which include semiconductor IP, security toolkits and DRM solutions
that address both client- and server-side security.

The solutions are centered on the use of encryption algorithms and security
blocks to protect data and ensure confidentiality, integrity and availability.
ESS offers three product lines: a Content Protection product line, a Security
Toolkit product line and a Semiconductor IP product line.

ESS products are used in hundreds of millions of mobile and networking
products to ensuredata privacy for businesses and individuals, and are sold
to a variety of tier-one brand name customers, such as Alcatel-Lucent, Cisco,
HBO, LG, Motorola, Nokia, Samsung, Sky and Texas Instruments.

ESS recorded^2 net revenue of USD25.3 million in 2011, with gross margins
exceeding 90 percent and operating income of USD6.3 million. For the first
nine months of 2012, the net revenue was USD21.4 million and the operating
income USD6.2 million.

Conference call details

Rémy de Tonnac, Chief Executive Officer of INSIDE Secure, jointly with Richard
Vacher Detournière, General Manager and Chief Financial Officer, will comment
on the acquisition of ESS and will be available to answer questions during a
conference call to be held on 19 November 2012 at 3pm CET / 2pm GMT / 9am EST.
The call will be held in English.

To participate in the conference call, you may call the following numbers
prior to the scheduled start time: +33 (0) 1 70 77 09 40 (France) or
+44203367 9453 (United Kingdom) or + (1) 866907 5923 (USA).

This press release and other presentation materials will be available on
INSIDE Secure’s website:

A replay of the conference call will also be available approximately two hours
following the conference call and for 90 days on the Group’s website.

About INSIDE Secure

INSIDE Secure (NYSE Euronext Paris FR0010291245 – INSD.PA) is a leading
designer, developer and supplier of semiconductors, embedded software and
platforms for secure transactions and digital security. INSIDE mobile NFC,
secure payment and digital security products provide security for a wide range
of information processing, storage and transmission applications. The
company’s customers are found in a wide range of markets, including mobile
payment, identification documents, access control, transit, electronic device
manufacturing, pay television and mobile service operators. For more
information, visit

Forward-looking statements

This press release contains certain forward-looking statements concerning the
INSIDE Secure group. Although INSIDE Secure believes its expectations to be
based on reasonable assumptions, they do not constitute guarantees of future
performance. The group’s actual results may accordingly differ materially from
those anticipated in these forward-looking statements owing to a number of
risks and uncertainties. For a more detailed description of these risks and
uncertainties, please refer to the “Risk Factors” section of the annual
financial report of 27 April 2012, available on

^1 INSIDE Secure uses performance indicators that are not strictly accounting
measures (adjusted operating result, and adjusted income /(loss)). These
indicators are not defined under IFRS, and do not constitute accounting
elements used to measure the group’s financial performance. They should be
considered in addition to, and not as a substitute for, any other operating
and financial performance indicator of strict accounting nature, as presented
in the Group’s Consolidated Financial Statements and the corresponding notes.
The Group uses these indicators because it believes they are useful measures
of its operating performance and of its operating cash flow generation.

^2 Unaudited, US GAAP


Press and investor contacts
Corporate communications
Geraldine Saunière
Marcom Director
+33 (0) 4 42 39 33 01
Financial communications
Jérôme Biscay, Alexandra van Weddingen
+33 (0) 1 53 96 83 83
Investor relations
Richard Vacher Detourniere
Chief Financial Officer
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