L-1 Identity Solutions entered into an agreement to be acquired by Safran in a merger transaction providing for stockholders to receive US$12 per share in cash, for an aggregate enterprise value of approximately $1.6 billion, inclusive of outstanding debt. The per share consideration of $12 incorporates the purchase price to be received pursuant to the sale of the L-1 intelligence services businesses as described below. The per share price represents a premium of 24 percent over L-1's closing stock price on the NYSE on Sept. 17, and a premium of 66 percent over the closing stock price on Jan. 5, the day prior to L-1's announcement of its strategic alternatives review process.
Under the terms of the agreement, Safran has agreed to acquire L-1 Identity Solutions, following the sale of L-1's intelligence services businesses 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 $486 million and adjusted EBITDA of $82.5 million (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 (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.
Safran is an 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.
"I have a deep respect for L-1's business and its contribution to the security industry. We are all 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," said Jean-Paul Herteman, CEO of Safran.
In connection with the Safran transaction, BAE Systems, has agreed to acquire the stock and membership interests of the entities comprising the L-1 intelligence services businesses for a purchase price of approximately $295.8 million in cash and approximately $7.2 million of certain assumed obligations for a total value of $303 million. These businesses include SpecTal, Advanced Concepts and McClendon. The businesses are expected to have combined estimated fiscal year 2010 revenues of $234 million and adjusted EBITDA of $32.5 million. It is anticipated that the acquisition will give the L-1 intelligence services team greater depth of resources, access to a wider group of customers and the opportunity to compete in larger and more multifaceted programs.
The close of the BAE Systems transaction is subject to certain US regulatory approvals, and is expected to close in the fourth quarter of 2010. The BAE Systems transaction is not conditioned on the closing of the Safran merger and is not subject to financing. The net proceeds from the closing of the BAE Systems transaction will be used to repay a substantial portion of the Company's indebtedness under its secured credit facility.
BAE Systems is a defense, security and aerospace company with approximately 107,000 employees worldwide. Upon the close of the transaction, the employees of the L-1 intelligence services businesses will join the BAE Systems Intelligence & Security sector.
"The acquisition of L-1's intelligence services group will advance our offerings to the US intelligence community. 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," said Linda Hudson, President and CEO of BAE Systems.
Working with their advisors, the L-1 board of directors and a special committee of the board conducted an exhaustive review of L-1's strategic alternatives over an eight month period that took into account the complexity and diversity of L-1's businesses.
"I am extremely proud of L-1's accomplishments in the development of multimodal 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,” said Robert LaPenta, Chairman, President and CEO of L-1 Identity Solutions.