US defense group L-1 Identity Solutions is to be sold to French rival Safran, with the UK’s BAE Systems also acquiring three of its Intelligence Services divisions, the company announced today.
BAE Systems, Europe’s largest defense contractor, will take over SpecTal LLC, Advanced Concepts, Inc., and McClendon, LLC, after which transaction Safran will take over the remaining units, Secure Credentialing Solutions, Biometric and Enterprise Access Solutions and Enrollment Services.
Spectal is a private intelligence consulting business staffed with former intelligence officers, many of whom have worked for the CIA and FBI. Advanced Concepts provides IT services to the military and to government intelligence organizations and McClendon offers geographical imaging services and analysis to governments.
The aggregate deal is approximately $1.6 billion, and values L-1 stock at $12 per share. BAE Systems is paying around $296 million for the three intelligence services units. The L-1 Board of Directors has unanimously approved both the Safran merger and BAE Systems sale transaction.
Robert V. LaPenta, chairman, president and CEO of L-1 Identity Solutions, said "I am extremely proud of L-1's accomplishments in the development of multi-modal biometric technologies and the role we have played in helping establish the identity management market over the last four years. A lot has changed since we started, and today the industry has grown significantly. It is at an important inflection point where a strong global infrastructure, greater scale and reach, larger investments in R&D and increased resources from human capital to cash, are a necessity in order to position optimally for the opportunities of tomorrow.”
“The acquisition of Spectal, Advanced Concepts, and McClendon will significantly advance our offerings to the US intelligence community,” said Linda Hudson, chief executive and president of BAE Systems. “Their capabilities will enhance BAE Systems’ existing knowledge and expertise and will better position us to offer our government customers the security and intelligence support they need to complete their missions, now and in the future.”
The BAE Systems transaction is expected to close in the fourth quarter of 2010, when the 1,000 employees of the L-1 intelligence services businesses will join the BAE Systems Intelligence & Security sector, based in Arlington, Virginia.
Safran is a leading international high-technology group with core businesses in aerospace, defense and security. Upon close of the transaction, Safran plans to integrate L-1's operations into its subsidiary, Morpho.
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 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."
The closing of the Safran acquisition is subject to the prior consummation of the BAE Systems sale transaction, L-1 stockholder approval, review by the US Committee on Foreign Investment in the United States (CFIUS) and certain other closing conditions including Hart-Scott-Rodino antitrust review. The transaction is not subject to financing and is expected to close in the first quarter of 2011, subject to the timing of applicable regulatory processes.
