STMicroelectronics to acquire Proton World

STMicroelectronics to acquire Proton World

STMicroelectronics, the world's second-largest supplier of smart cards, is to acquire e-purse pioneer Proton World International from Australia's ERG for an initial net cash consideration of A$60 million.

The sell-off comes barely a year after the loss-making Australian transit card specialist acquired PWI from its consortium owners for A$150 million.

Under the terms of the agreement, ERG will sell all its shares in PWI for a consideration of approximately A$110 million, reduced to a final cash pay-out of A$60 million after settlement of all inter-company accounts and payments for a 20-year license for global rights to the Proton technology. A milestone fee of approximately A$40.9 million is payable over the next ten years, relating to the sale to ERG or its customers of smart cards that incorporate an ST chip.

ERG chief executive, Peter Fogarty, says the cash proceeds from the sale will be redeployed to the company's core business. The transaction also improves operating results by eliminating approximately A$15 million in annual goodwill amortisation charges and removing the need to fund Proton's R&D, he says.

Based in Belgium, PWI has approximately 90 employees and develops smart card system software especially for e-purse, EMV (Europay/Mastercard/Visa) debit/credit cards, PKI security, and data management applications. As one of the world's major chip producers, ST will be able to provide an end-to-end solution for business customers and will additionally gain increased smart card system know-how, particularly in the key banking and financial fields

Proton World chief executive, Armand Linkens, says the acquisition will open up access to emerging markets such as China and Japan and position the company at the forefront of technical developments in multi-application chip cards.

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