Iridian's extensive intellectual property portfolio and industry-standard iris recognition algorithm will be combined with Viisage's wholly-owned subsidiary SecuriMetrics, Inc. to advance the development and implementation of SecuriMetrics' advanced hardware, software and database capabilities. Upon completion of the Iridian transaction and the pending merger with Identix Incorporated (Nasdaq: IDNX), Viisage is expected to become the only U.S.-based manufacturer of a full range of handheld and multi-modal biometric recognition solutions encompassing iris, finger and face.
Under the terms of its definitive agreement with Iridian, Viisage will pay Iridian shareholders $35 million in cash. In parallel with the negotiation of the Iridian transaction, Viisage also secured a $6.5 million reduction in potential contingency payments to SecuriMetrics under the terms of Viisage's February 2006 acquisition of SecuriMetrics, resulting in an effective "net" purchase price for Iridian of $28.5 million. The acquisition of Iridian will be funded primarily by proceeds from the initial $100 million investment into Viisage by L-1 Investment Partners in December 2005.
Iridian is expected to have positive net working capital and be debt free at the time of the close of the transaction. The company is estimated to generate positive pro forma EBITDA of approximately $3 million in 2006. Closing of the Iridian transaction, which is anticipated to occur in August 2006, is subject to the satisfaction of a number of customary precedent conditions, including obtaining requisite Iridian shareholder approval.
Current Iridian licensees (including Panasonic and Oki Electric Industry Co.) will continue to have non-exclusive rights to deploy Iridian's software and related intellectual property in integrated products manufactured by the licensees.
"With direct access to the IP that underpins the iris recognition market, our business will realise improved margins and cost synergies, as well as significant revenue opportunities," said Robert V. LaPenta, Chairman of the Board of Viisage. "Most importantly, we believe the market will now be primed for accelerated growth as the development of critical services and products required for widespread adoption of iris recognition technologies can proceed ahead unencumbered."
Iris recognition technology identifies people by the unique patterns of the iris - the coloured ring around the pupil of the eye - and is designed to meet the authentication needs of large-scale, country-wide applications. Iridian filed the first industry patent (Flom) for this technology in 1987, and with it controlled greater than 90 percent of the iris recognition market until the expiration of the patent beginning in 2005. Today the company maintains an extensive intellectual portfolio in this area, including holding the key iris algorithm patent that is the industry standard for iris recognition.
Iridian licenses iris recognition software and related intellectual property to hardware and software developers for applications in the government, military and commercial markets, both domestically and internationally. One of Iridian's more significant deployments includes the United Arab Emirates (UAE) Border Control Program. This program uses Iridian software in combination with third-party hardware at all land, air, and sea ports for enrolling visa applicants and visitors. The purpose of the program is to identify high risk or expelled individuals and ensure that they are prevented from re-entering the country. To date, the program is believed to have prevented more than 70,000 expellees from re-entering the country.
"This acquisition brings together the premiere iris device and database management provider with the recognised leader in iris algorithm development and will provide tremendous benefits to our customers and the overall market," said Greg Peterson, Founder & CEO of SecuriMetrics. "This combination removes the market perception and technology development challenges that have prevented widespread market adoption and will support the development of the truly multi-biometric search capability that is in such high demand by large federal projects and civil agencies."
Iridian's business operation, currently located in Moorestown, N.J., is expected to be integrated into Identix' Jersey City, N.J. research facility once the pending Identix merger is consummated.