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L-1 acquires Digimarc business for secure credentialing.

L-1 Identity Solutions : 25 March, 2008  (Company News)
Digital watermarking from Digimarc combined with L-1 Identity Solutions' biometrics expertise to fulfil demand for government identity management programmes.
L-1 Identity Solutions has entered into a definitive agreement to acquire the ID Systems business of Digimarc in a stock and cash transaction valued at approximately $250 million. The acquisition has been approved by the respective Board of Directors of each company.

Under the terms of the definitive agreement, Digimarc stockholders will receive approximately 50 percent of the purchase consideration in shares of L-1 stock and 50 percent in cash. Digimarc stockholders will also receive shares in a new company bearing the Digimarc name and holding Digimarc's digital watermarking business. The cash consideration is approximately $120 million.

"The synergies between our secure credentialing businesses make this a natural combination and one that will deliver great benefit to our customers and the industry," said Robert LaPenta, Chairman and CEO of L-1 Identity Solutions. "Digimarc's expertise in centralised production of credentials, together with L-1's biometric recognition and document authentication capabilities, will enable us to provide a secure end-to-end solution for issuance of government credentials like driver's licenses. Additionally, we believe that together we will offer the best in class technology to meet the needs of US and international credentialing programs."

L-1 believes that the combination of L-1 and Digimarc's Secure ID business will bring significant synergies and benefits to the identity management industry. The company's customers will have a choice of secure credentialing production systems, including central issuance, over-the-counter or a hybrid approach that utilizes both methods. The combined security features will deliver best-in-class protection to produce the most secure credentials possible and the industry knowledge of the combined teams will foster the development of superior next-generation security functionality for future applications. The increased industry knowledge and cross-border relationships will help secure identities across the globe in emerging markets such as Russia and Asia-Pacific, as well as with Canadian and Mexican biometric credentialing programs. Leveraged synergies between the businesses will reduce the cost structures of both organizations to drive greater operational efficiency and shareholder value. These benefits also will be passed directly to the customer for improved customer service from the combined call center and field service teams, bolstered competency of the entire organization from acquired back office systems and processes, and valuable savings with more competitive pricing from economies of scale.

The transaction is expected to close in the second half of 2008 and is subject to customary regulatory approvals and other closing conditions, including approval by Digimarc stockholders at the stockholder meeting and the spin-off of the digital watermarking business.
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