Netherlands-based digital security company Gemalto has agreed to acquire the identity management business of 3M Corp. [MMM] for $850 million in cash, saying the deal will round out its government solutions business and positions it to provide commercial biometrics solutions.
The deal is expected to close in the first half of 2017, subject to regulatory approvals. 3M’s identity business includes biometrics solutions provider Cogent, the Document Reader business, and Secure Materials business, which combined have $215 million in annual sales and operating income of $58 million.
Announcement of the deal follows an agreement in September by the Massachusetts-based private equity firm Advent International to acquire the identity solutions business of France’s Safran Group for $2.7 billion. Advent plans to combine the Safran business with digital security technology provider Oberthur Technologies. The Advent acquisition is also expected to close in 2017.
3M’s identity management business sells to governments, law enforcement, border control and civil identification entities globally. The company’s fingerprint matching algorithms are a key feature of the U.S. IDENT biometric matching system operated by the Department of Homeland Security. 3M also provides biometric matching algorithms for face, iris and other modalities.
Gemalto says that once the deal closes, “Our combined offers and experience in the Public sector to manage the enrolment, identification of individuals, flow of passengers and border control should contribute to stronger national security. On the commercial side, as online and mobile transactions grow, new forms of multi-factor authentication and identification are needed to complement physical ID documents. Combining market access and technologies from 3M’s Identity Management business and Gemalto will allow trusted national identities and strong biometric authentication to develop throughout the digital economy.”
Gemalto plans to combine the 3M business with its Government Programs business, which had $416 million in sales in 2015. Including the 3M identity business, Government Programs would account for about 18 percent of Gemalto’s overall sales last year.
Gemalto’s core technologies are in authentication and protection. Its software is embedded in devices and objects to authenticate people and things and which also runs on platforms for data protection, the company says. Other core capabilities include key management and secure issuance.
The 3M identity business has 450 employees. The business’s sales by region include 54 percent from the Americas, 32 percent from Europe, the Middle East and Africa, and 14 percent from Asia.
3M’s identity business gets 61 percent of sales from the biometrics portfolio, 26 percent from secure documents and related software, and 13 percent from Document Readers, including document authentication software, used to authenticate civil IDs and documents.
Goldman, Sachs & Co. is 3M’s financial advisor on the deal.