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3M buys Cogent for Rs.4,429.17 crore

Posted: 02 Sep 2010     Print Version  Bookmark and Share

Keywords:biometric  security  Cogent acquisition 

In a definitive agreement 3M has agreed to acquire Cogent Inc. for $10.50 per share and an aggregate value of approximately Rs.4,429.17 crore ($943 million), or approximately Rs.2,019.66 crore ($430 million) net of cash. Cogent Inc., or Cogent Systems, is a provider of finger, palm, face and iris biometric systems.

The agreement provides for a subsidiary of 3M to commence a tender offer to purchase all outstanding shares of Cogent Systems within ten business days.

The Board of Directors of Cogent Systems has unanimously recommended that the shareholders of Cogent Systems accept the offer and Ming Hsieh, Cogent Systems' founder and CEO, and certain entities affiliated with him have agreed to tender their shares to the offer. The offer will be subject to the tender of a majority of Cogent Systems' shares and to certain other customary closing conditions. The transaction is expected to close during the fourth quarter of the year.

Cogent Systems participates in the Rs.18,787.55 crore ($4 billion) global biometric market, which is projected to grow at a rate greater than 20 per cent per year. Its Automated Fingerprint/Palmprint Identification Systems, or AFIS, enable customers to capture fingerprint and palm print images electronically, encode prints into searchable files, and accurately compare a set of fingerprints/palm prints to a database containing potentially millions of prints in seconds.

Identification and authentication solutions from 3M include border management products; document manufacturing and issuance systems for IDs, passports, and visas; document readers and verification products; and security materials, such as laminates, to protect against counterfeiting and tampering.

On a GAAP reported basis, 3M estimates the acquisition to be Rs.4.23 ($0.09) to Rs.4.70 ($0.10) dilutive to earnings in the first 12 months following completion of the transaction. Excluding purchase accounting adjustments and anticipated integration expenses, 3M estimates the acquisition to be Rs.0.47 ($0.01) to Rs.0.94 ($0.02) accretive to earnings over the same period. First year EBITDA, excluding purchase accounting and integration costs, is expected to be approximately 35 per cent-to-sales.

With approximately Rs.610.60 crore ($130 million) in revenue in 2009, Cogent Systems is based in Pasadena, Calif., and employs approximately 500 people. The company has operations in Ohio, Virginia, Austria, Canada, China, and the United Kingdom. Cogent Systems would be part of 3M's Security Systems Division. Ming Hsieh will remain an integral part of the combined business going forward.

J.P. Morgan acted as exclusive financial advisor to 3M; Credit Suisse and Goldman, Sachs & Co. acted as financial advisors to Cogent Systems.





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