L-1 Investment Partners, a Stamford, Conn.-based private management investment firm, will buy about $100 million in Viisage common stock.
L-1 Investment Partners, a Stamford, Conn.-based private management investment firm, will buy about $100 million in Viisage common stock as a way to accelerate L-1’s growth and expansion in the biometrics market.
As part of the agreement announced last week, L-1 purchased about 19 million newly issued shares at a price of $5.25 per share. Eighty-five percent of the $100 million investment will be used for acquisitions subject to board approval. Terms of the agreement also include warrants to purchase an additional 4 million shares of common stock at $5.50 per share.
Viisage shareholders must approve the investment at a special meeting, whose date has not been set yet. But according to a press release, the company expects to close the transaction by the end of the year.
Under the agreement, Robert LaPenta, chief executive officer of L-1, will also become chairman of the board at Viisage, which is based in Billerica, Mass. LaPenta, who formed L-1 this summer has been looking to invest in the biometrics industry. He will also have the right to appoint two additional board members.
“The investment and the expertise of the L-1 team will help support our growth strategy of becoming the leading identity solutions provider worldwide and enable Viisage to aggressively pursue our strategic goals,” Bernard Bailey, president and CEO of Viisage, said in a prepared statement. “L-1 is expected to provide significant contributions to Viisage, including cash for our acquisition strategy.”
The company provides biometrics-based identification and authentication products, including facial-recognition technology, and has a significant presence in the federal, state, local, and international government and law enforcement markets.
Viisage is anticipating $13 million to $14 million in revenues in the third quarter of this year, down from a projected $16 million to $20 million. The downturn is due to delays in deployments, budgetary pressures and deferral of federal spending, according to the release.
“Forecasting the timing of new solution deployments is a short-term challenge, but we are confident in our strategy and the long-term demand for our enhanced products and solutions,” Bailey said in the statement. “We are anticipating high revenue growth in excess of 20 percent for 2006 over our updated expectations for 2005 full year revenues of between $62 million and $65 million. We are looking forward to working closely with the L-1 team as we add to our advanced technology identity solutions.”
LaPenta, who formerly headed L-3 Communications, started L-1 to specifically build a biometrics powerhouse company through acquisition. In a previous interview with Federal Computer Week, he said the biometrics industry is still in its infancy and a lot of technology companies have inadequate financing, management depth and marketing.
“And it seemed to me that the technology was coming of age just at the exact time when the market was beginning to develop,” he said in that interview. “With all of those things pointing in the right direction, I thought this would be a great opportunity, and that's why I decided to pursue it.”
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