Fingerprint Chief Considers Acquisitions to Speed ExpansionBy and
Company seeking new legs for the business to stoke growth
Rival Next Biometrics’s stock rises in Oslo on M&A speculation
Fingerprint Cards AB’s new chief executive officer says he may make acquisitions to accelerate expansion into new market segments for the Swedish maker of biometric sensors.
Fingerprint wants to enter areas such as sensor-equipped cards, access systems for buildings, smart-home technology and cars, Christian Fredrikson, who took the helm about six weeks ago, said in an interview at the company’s Stockholm headquarters. One way to do that is to acquire technology, businesses or competence outside its own core mobile business, he said.
“In the area we’re now in, we have a good position, but surely in new segments we have to look at our position,” he said. “I always consider M&A. There are companies, absolutely, but we’ll have to consider if it’s the right strategic fit.”
Fredrikson took over a company whose stock soared 1,600 percent last year on investor optimism that biometric devices such as fingerprint sensors will increasingly be standard in smartphones, tablets and other products. The main focus now is in so-called smartcards, which for example allow banking customers to use their cards without PIN codes. While margins on existing products may face pressure from rivals, Fingerprint’s goal is to add new legs to the business to stoke growth.
The company announced in June that Fredrikson, previously CEO of Finnish data-security company F-Secure Oyj and who has held several leading positions at Nokia Oyj’s networks division, would succeed Joergen Lantto. The stock has declined 12 percent this year amid concern about increasing competition.
Fingerprint Cards rose as much as 1.5 percent in Stockholm trading on Thursday. Norway’s Next Biometrics Group ASA soared as much as 6.3 percent to 153 kroner in Oslo, its steepest gain since Aug. 9, amid takeover speculation following Fredrikson’s comments. Next’s product areas include smartcards, smartphones, doors, wearable devices, payment terminals and key fobs.
Fingerprint has “a funnel” that it is looking at regarding potential acquisitions, Fredrikson said. The company is unlikely to seek larger acquisitions as big purchases are “very dangerous in such a fast-moving industry” because of the years of integration required.
“You have to evaluate what you can do yourself, what you can do with partners and what you should buy because it’s so important,” Fredrikson said. “It has to be something we need technologically, something prominent.”
SEB AB said in a Sept. 14 note that while competition for Fingerprint will increase, it finds “it strange to dismiss FPC as a one-hit-wonder.” The company has a strong position in the fastest-growing smartphone segments and has established barriers to entry for smaller players. SEB initiated coverage of the company and rates the stock a buy.
Fingerprints can also be used to control access to areas in homes, such as wine cellars or medicine cabinets, or to open cars and allow personal settings for vehicle engines or music systems, according to Fredrikson. To aid expansion, Fingerprint will boost investments, the CEO said, declining to say by how much.
The company still expects its share of the market for fingerprint sensors to end up in the upper half of a 50 percent to 70 percent range this year, from 45 percent last year. It’s unlikely to be able to hold on to that market share, according to Fredrikson.
“It cannot continue like that and we don’t plan to keep those market shares,” he said. “We haven’t given any guidance, but in our plans we have said that we understand well that competition in high technology just increases.”