French defence electronics maker Safran is to acquire L-1 Identity Solutions, a US company that protects personal identities and assets, in a merger transaction providing for stockholders to receive USD12.00 per share in cash, for an aggregate enterprise value of approximately USD1.6bn inclusive of outstanding debt.
Lutetia Capital, a merger arbitrage hedge fund, has L1 as its largest position.
The per share consideration of USD12.00 incorporates the purchase price to be received pursuant to the sale of the L-1 intelligence services businesses.
The per share price represents a premium of 24 per cent over L-1’s closing stock price on the NYSE on 17 September and a premium of 66 per cent over the closing stock price on 5 January, the day prior to L-1’s announcement of its strategic alternatives review process.
L-1’s intelligence services businesses will be sold to BAE Systems. After giving effect to the BAE Systems transaction, L-1 will be comprised of secure credentialing solutions, biometric and enterprise access solutions and enrollment services. These businesses are expected to have combined estimated fiscal year 2010 revenues of USD486.0m and adjusted Ebitda of USD82.5m (excluding the impact of costs relating to the strategic alternatives review process).
L-1 believes that the Safran acquisition will bring to the businesses an immediate global infrastructure, greater scale and reach, the capacity for larger investments in research and development and increased resources to accelerate growth and expand into new global markets.
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 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.
Jean-Paul Herteman, chief executive officer of Safran, says: "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."
