The Massachusetts-based private equity firm Advent International on Thursday said it has agreed to acquire the identity and security business of France’s Safran Group for $2.7 billion, a deal that will combine Safran’s strong presence in biometric products and identity solutions with Advent’s portfolio company Oberthur Technologies (OT), a leader in embedded digital security technology.
Safran said in March that it planned to divest its detection business, which is being acquired by Britain’s Smiths Group, and review options for its identity business. Advent’s deal for Safran’s Identity and Security business is expected to close in 2017 and is subject to regulatory approvals in Europe and the United States and by workers’ councils in Europe.
The combination of Safran’s Identity & Security (I&S) business with OT will create a $3.1 billion company with a strong portfolio of identity technologies with a large presence in France. Safran’s business also has a strong presence in the U.S., particularly with the MorphoTrust business it acquired from the former L-1 Identity Solutions.
Safran said that through the combination with OT it’s I&S business will better “meet customers’ requirements at a time when security in the digital world and emerging needs for public security are major challenges.”
OT, which is based in France, has digital security technology products and solutions for mobile, authentication, and payment applications, and produces smart cards. OT is the top provider of chip and PIN, called EMV, cards in the U.S. The company has customers worldwide.
OT has 6,500 employees and Safran’s I&S business 7,800. The I&S business had about $1.8 billion in sales in 2015 and OT about $1.3 billion.
Advent, the majority shareholder in OT, said that by combining the two companies they “will be uniquely positioned to accelerate the convergence between government and commercial markets.”
In the U.S. Safran’s I&S business provides solutions such as biometric capture technology and biometric matching capabilities to federal, state and local customers.
Safran’s pending divestitures of its detection and I&S businesses will free it to focus on its core aerospace and defense business. The company also said it will realize a pre-tax gain on the sale.
“Upon the closing of this transaction, which would follow our agreement to sell our detection activities, Safran would be a group entirely focused on aerospace and defense and concentrated on its on path of strong growth and high profitability,” Ross McInnes, chairman of Safran, said in a statement.
Bpifrance, a subsidiary of the French state, will also make an equity investment in Safran’s I&S business alongside Advent.