Safran pens deal with BAE for L-1

City A.M. Reporter
FACE-RECOGNITION software maker L-1 Identity Solutions is being sold to Safran and BAE Systems, two top European defence firms.

French group Safran confirmed a $1.09bn (£701m) cash deal to buy the US security company and its core biometric business in a move that will also see British defence company BAE Systems extend its reach in the US.

L-1’s shares rose 20 per cent to be the top gainer in early New York trading after state-controlled Safran said it would offer 24 per cent more than L-1’s closing share price of $9.70 on Friday, which valued the four-year-old company at $900m.

The $12 per share deal will go ahead if L-1 completes a plan to sell its government consulting arm to BAE for $296m.

The $12 per share offer from Safran, which makes aero engines, military goggles and security equipment, matched the top end of analyst forecasts seen before the announcement.

“Great things come at a justified price,” said Safran finance director Ross McInnes.

The shake-up is the latest sign of mid-tier security and defence firms getting snapped up by traditional arms suppliers.

As major contractors face sharp cuts in defence budgets, they are steadily targeting smaller players with niche technologies in cybersecurity, civil security, surveillance and intelligence -- which is a deliberate shift in corporate focus from bombs to bytes.

L-1’s face-recognition and other biometric products are used by government agencies for improving security and border management and commercially at financial institutions.