ERG acquires Proton World

ERG acquires Proton World

Australian smart card group ERG has bought out its fellow shareholders Amercian Express, Banksys, Interpay Nederland and Visa International in Belgian-based payment and ID card company Proton World International.

ERG's business partners will be issued with approximately 75.5 million ERG shares plus A$58.8 million in cash in return for relinquishing their stakes in Proton World. The agreements with American Express and Visa International also provide for an entitlement to 8 million ERG options.

The deal calls for long-term (5-7 year) service level agreements to be executed by American Express, Banksys and Interpay Nederland. The contracts are expected to generate revenue in excess of A$200 million. ERG says it will merge its existing Belgian operations with those of Proton World, generating savings of A$8-12 million.

Proton World was formed in 1998 as a joint venture between ERG, Banksys (a joint venture between the Belgian banks), American Express, Interpay Nederland (a joint venture of the Dutch banks), and Visa International. There are now more than 35 million Proton-based smart cards in circulation worldwide and more than 500 banks have deployed the technology.

Together, ERG and Proton technology will support more than 50 million smart cards globally.

ERG’s chief executive, Peter Fogarty, says the full acquisition of Proton World would enhance ERG’s strengths in the smart card arena.

“ERG’s existing Mass technology is the world’s leading transport smart card technology. The combination with Proton Prisma technology means that ERG will now have the ability to deliver full multi-application smart card solutions, including high-level security for the financial services and identity markets."

Proton World CEO Armand Linkens comments: “Proton World has made a name for itself with its security architecture and smart card solutions in the financial industry. Our know-how is very complementary with the achievements of ERG in mass transit."

The Proton technology has been sold to licensees in 24 countries around the world and has been deployed by more than 500 banks, including major banks in Belgium, the Netherlands, Sweden, Switzerland and Norway.

Proton World’s total revenue was approximately A$33 million for the year ending December 2000. To date, revenues have largely reflected income from the sale of licences and hardware sales and services. ERG says recurring income associated with card fees is poised to increase in the near future as the commercial adoption of the card base expands.

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