Viisage (Nasdaq: VISG) announced today the intention to acquire Nashville, Tennessee-based Integrated Biometric Technology (IBT), a leader in providing fingerprinting products, services and solutions to government, civil, and commercial customers that require criminal background checks and screening. This is the first proposed acquisition for Viisage, a leading provider of advanced technology identity solutions, since the announced investment in Viisage by L-1 Investment Partners, LLC of Stamford, Connecticut. The IBT proprietary fingerprint technology and background screening solutions will be offered as part of the Viisage portfolio of identity solution products and are important elements in the Viisage vision of offering an end-to-end solution for securing and managing personal identities. The IBT solutions also are expected to allow Viisage to further penetrate existing markets and create a channel into new market opportunities.
L-1 has entered into a definitive agreement to acquire 60 percent of the outstanding ownership interests of IBT for $35 million in cash and has agreed to acquire the remaining 40 percent on or before January 30th, 2006 for an additional $25 million. It is expected that upon consummation of the L-1 investment in Viisage, anticipated in December 2005, Viisage would acquire from IBT all outstanding stock of IBT for five million newly-issued shares of pre-reverse split Viisage common stock and pay L-1 $35 million in cash, thereby transferring full ownership of IBT to Viisage. The transaction is expected to produce revenue in the $30 to $35 million range and be accretive in 2006.
"Identity solutions that combine leading face recognition and fingerprint solutions with high security credentialing technologies are increasingly in demand," said Bernard Bailey, president and CEO of Viisage. "The addition of IBT's expertise in fingerprinting solutions to our existing identity solutions platform is expected to be a very attractive solution for both existing and prospective customers. By combining our two companies' valuable management resources and assets at the Federal and State level, along with IBT's penetration into the financial services sector, we believe we are clearly positioning Viisage to achieve sustainable long-term growth."
IBT would add a deeper dimension to the Viisage portfolio of solutions by automating the electronic processing of fingerprints for criminal background checks and searches with the Federal Bureau of Investigation's (FBI) Integrated Automated Fingerprint Identification System (IAFIS). IBT also provides this leading fingerprinting solution to the banking, education and securities industries.
IBT's proprietary software and processes have revolutionized livescan fingerprint capture, management, and transmission, and are used to perform background screening for applicants seeking a new job or individuals who provide services that require their identity to be vetted. For example, pursuant to the USA PATRIOT Act, the estimated 2.7 million commercial drivers that transport hazardous materials are required to undergo background screening. In 2004, the US Transportation Security Administration (TSA) awarded a multi-million dollar contract, with a potential value in excess of $100 million over a four-year period, to IBT under which IBT has deployed a sophisticated network of electronic fingerprint capture devices throughout the United States to process applicants and provide criminal background checks and screening for hazardous materials transportation licenses in 34 states in support of the USA PATRIOT Act mandate.
"The synergies between our goals in building the Viisage identity solutions platform and the unique capabilities of IBT provide great upside opportunities in the high growth identity solutions market," added Bob LaPenta, chairman and CEO of L-1 Investment Partners, LLC. "IBT is an established company with a solid customer base that is complementary to Viisage's existing customer base and offers channels into new markets. Viisage and IBT each have a solid base of recurring revenue, which we expect will provide for greater visibility and stability in the businesses going forward."
IBT customers include US Federal Government agencies, state and local governments as well as the three largest banks in the United States, and 34 state departments of motor vehicles including Connecticut, Delaware, North Dakota, Oklahoma, Rhode Island, and West Virginia. Combining IBT's success with fingerprinting solutions in the financial market with Viisage's document authentication, proofing and credentialing solutions is expected to provide highly desirable end-to-end identity proofing solutions for these and other institutions that must meet strict federal regulations for vetting a person's identity prior to granting privileges to those individuals, such as opening a new bank account.
Charles Carroll, president and CEO of IBT, commented, "IBT customers have benefited tremendously from our fingerprinting solutions, which have helped with significant business issues ranging from background checks for compliance to cost savings from fraud. We are delighted with the plan to become part of a greater suite of identity solutions and believe that Viisage offers the leading solutions in the market today. The synergies provided by this combination will enhance our product offerings as we pursue further opportunities such as TWIC and the Registered Traveler Program."
