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Inside Secure to buy Embedded Security Solutions

19 November 2012  |  1397 views  |  0 Source: Inside Secure

Inside Secure (NYSE Euronext INSD.PA) today announced that it has entered into an agreement to purchase Embedded Security Solutions (ESS), a high expertise business which designs and develops encryption-related security hardware intellectual property (IP) and software for a variety of industries, including the mobile and networking markets.

The transaction is expected to close before the end of 2012 subject to certain customary closing conditions. The supervisory board of INSIDE Secure has unanimously approved the transaction.

This strategic acquisition will enable INSIDE Secure to reinforce its position as a key player in the fast-growing security solutions market:

• ESS brings to INSIDE Secure complementary offerings for a complete security architecture, as well as additional solutions for securing both content (Digital Rights Management or "DRM") and data exchange (Virtual Private Network or "VPN").
• ESS complements INSIDE Secure's know-how with a talented team of 79 highly qualified employees located in Europe, Asia and in the US, as well as its extensive and highly regarded security intellectual property and technology portfolio, which aligns with INSIDE's long-term strategy to generate its own IP licensing revenue.
• This acquisition will allow INSIDE Secure to access a wider customer base in the mobile, content provider and network industries that serve a variety of application markets (smart grids, automotive, gaming and others).
• By leveraging the strong capabilities of INSIDE Secure's existing mobile NFC and digital security businesses, the combined offer should lead to additional sales in high growth markets.

At closing, INSIDE Secure will pay USD 38 million in cash subject to a working capital adjustment and up to an additional USD 10 million subject to completion of certain post-closing transactions. The transaction is expected to be accretive to INSIDE Secure's 2013 adjusted operating and net results and to enhance INSIDE Secure's gross margin.

Commenting on this announcement, Remy de Tonnac, chief executive officer of INSIDE Secure, said: "This transaction is an important opportunity to extend our position in the security value chain and reinforce our global offer in high-end security solutions. It will enable us to complement our product and solution portfolio in mobile NFC and digital security and enhance our customer offerings in fast-growing markets. The talented ESS team who will be joining will contribute their know how and expertise to advancing our innovative technologies and help us address new security markets."

Overview of ESS know-how, products and expertise
ESS designs, develops and sells a range of embedded security solutions, encompassing hardware IP and software. It offers a host of security solutions tailored for businesses and consumers on the move.

The ESS portfolio offer includes a comprehensive suite of embedded security solutions which include semiconductor IP, security toolkits and DRM solutions that address both client-side and server-side security.

The solutions are centered on the use of encryption algorithms and security blocks to protect data and ensure confidentiality, integrity and availability. ESS offers three product lines: a content protection product line, a security toolkit product line and a semiconductor IP product line.

ESS products are used in hundreds of millions of mobile and networking products to ensure data privacy for businesses and individuals and are sold to a variety of tier-one brand name customers, such as Alcatel-Lucent, Cisco, HBO, LG, Motorola, Nokia, Samsung, Sky and Texas Instruments.

ESS recorded[2] net revenue of USD 25.3 million in 2011, with gross margins exceeding 90 per cent and operating income of USD 6.3 million. For the first nine months of 2012, the net revenue was USD 21.4 million and the operating income USD 6.2 million. 

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