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AuthenTec buys SafeNet’s Embedded Security Solutions Division

authenteclogoMelbourne, Fla. — Boosting its security and identify management solutions portfolio, AuthenTec, a provider of smart fingerprint sensors and solutions, has acquired SafeNet, Inc.’s Embedded Security Solutions Division in a cash and stock transaction. With the transaction, AuthenTec will also become the exclusive worldwide supplier of SafeNet’s SafeXcel security processor ICs, accounting for more than $3 million in incremental sales in 2009.

SafeNet’s Embedded Security Solutions products are used in communication and network products to ensure data privacy, and are sold to a variety of brand name customers including HP, Samsung, LG, Ericsson, AMD, Cisco, Alcatel-Lucent, Juniper Networks, Nokia-Siemens and Texas Instruments.

AuthenTec gains SafeNet’s Embedded Security Solutions staff of encryption, algorithm, software and silicon design engineers and its portfolio of software, IP and hardware products. These include SafeXcel IP Cores (i.e., protocol aware inline security processing, security packet processing, encryption, authentication/hashing, public key acceleration, true random number generation, etc.), QuickSec Embedded Security toolkits, Mobile VPN and Digital Rights Management (DRM) Fusion Solutions. It also includes the Division’s 23 U.S. patents as well as additional foreign patents, bringing AuthenTec’s U.S. portfolio to 144 issued and pending patents.

AuthenTec will also add SafeNet’s security and encryption IP content and expertise, which aligns with AuthenTec’s longer term strategy to generate its own IP licensing revenue. These IP cores will also reduce the company’s planned licensed IP expenses.

The Embedded Security Solutions’ team will continue to operate from engineering locations in the Netherlands and Finland, while also strengthening AuthenTec’s existing sales and support locations in Japan, Korea, Taiwan, the U.S., and Europe.

SafeNet’s Embedded Security Solutions recorded embedded IP and software revenues of $15.5 million in 2009 with gross margins exceeding 90 percent and operating income margins of over 20 percent. Under terms of the transaction, AuthenTec paid $8.5 million in cash and issued 1.2 million shares (valued at $2.8 million at the closing) of its common stock. The transaction also calls for an earn-out of up to $2.5 million in cash based on the attainment of certain revenue goals for the remainder of 2010.