French smart card outfit Gemplus is to acquire Finnish secure ID and document company Setec for as much as €96.5 million.
Gemplus will pay €30 million in cash upfront, plus a maximum €30 million more based on Setec's order backlog at the end of 2005 and 19 million Gemplus shares, with a value of €36.5 million at the close of trading in Paris on Friday.
Privately-held Setec has annual sales of about €58.5 million and supplies passports and e-passports to Finland, Sweden, Denmark, Norway and Lithuania. The firm, which employs 350 people, is part of the consortium that was recently awarded the Singaporean e-passport, in cooperation with Gemplus.
News of the transaction comes on the back of a disappointing set of first quarter results from Gemplus, with sales falling by 2.1% to to €193 million, as a result of a decline in payment cards. First-quarter operating profit rose to €7.5 million from €3.5 million in 2004, some €2.5 million off best expectations.
Analysts welcomed the Setec acquisition but punished the firm for its poor sales, pushing the stock down 14 cents, or 7.2%, to €1.81 in midday Paris trading.