Safran SA, a French maker of aerospace engines and equipment, agreed to buy most of L-1 Identity Solutions Inc. for $1.6 billion including debt to expand biometric fingerprint and facial recognition technology.
Safran will pay $12 a share, 24 percent more than L-1’s share price on Sept. 17, Safran said today. The U.S. company also agreed today to sell its counter-terrorism business to BAE Systems Plc for $296 million in cash, and the L-1 purchase by Safran is contingent on the BAE deal going through first.
Since 2007, Safran has made several acquisitions in the security and defense area under Chief Executive Officer Jean- Paul Herteman. Safran also remains interested in Zodiac Aerospace, a maker of airline seats, escape chutes and other components, the CEO said today.
“There’s no link between L-1 and our feeling about Zodiac,” the CEO said on a call with analysts today. “We always said that merging Zodiac and Safran would be a good idea and we are still looking at that.”
Zodiac, based near Paris, rebuffed an initial overture in July, saying it preferred to remain independent. Safran wants Zodiac to enlarge its product range to engines, braking systems and landing gear, as well as letting Safran deepen ties with planemakers including Airbus SAS and Boeing Co.
Safran predicts the general biometrics market will grow 15 percent annually over the next five years, though Safran is taking a “conservative” forecast of 10 percent growth for the business it’s acquiring, according to Olivier Andries, who heads the defense and security division. The Paris-based manufacturer got 19 percent of sales from defense security solutions last year, according to data compiled by Bloomberg.
Safran gained 5.2 percent to 20.40 euros in Paris today, giving the company a market value of 8.5 billion euros.
L-1’s estimated net debt at the transaction’s completion will be approximately $100 million, including the cash proceeds from the prior sale of the government consulting business, Safran said in an e-mailed release today.
Safran’s defense and security unit has made three acquisitions since mid 2007. Those include Sdu-Identification BV in the Netherlands for 325 million euros. Sdu is one of Europe’s biggest makers of secure identification cards and passes.
Safran bought the biometry businesses of Motorola Inc. for $133 million in April 2009, and in September, it purchased 81 percent of GE Homeland Protection from General Electric Co. for $407 million. The business was renamed Morpho Detection. GE has kept 19 percent of the company. The businesses involve detection of dangerous substances carried in baggage.