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Security Newswire

Hirsch to Merge with SCM Microsystems

December 11, 2008

Hirsch Electronics, in the industry for 25 years, is merging into SCM Microsystems, one of world's leading suppliers of smart card readers, software and silicon for the PC platform. The action underlines the movement to convergence of physical and logial security. Hirsch's Velocity Security Management System integrates diverse security systems while it also boasts end-to-end HSPD-12,PIV and FPIS 201 smart card solutions. The merger depends on stockhlders' approvals.
From the official announcement...
The combination of SCM and Hirsch is expected to result in a new security products leader at a time of escalating market demand for converged security solutions leveraging smart cards and smart chip-enabled devices.

Pursuant to the proposed merger, the security holders of Hirsch will receive a combination of cash, SCM common stock and warrants to purchase shares of SCM common stock, with total consideration based on the price of SCM common stock at the time of closing.

The combination of SCM, a leading global provider of smart card-based logical access readers, and Hirsch, a top player in the physical security industry and a pioneer in the electronic access control market, will provide customers with a more comprehensive and powerful set of solutions for linking physical (e.g., building) and logical (e.g., PC and network) access control across the enterprise. Together, the two companies will be better positioned to meet a broader set of customer needs, strengthen their market presence globally, leverage existing distribution channels and achieve an operational scale to accelerate growth into new markets.

“This merger essentially doubles the size of our company and brings significant benefits to our customers, shareholders and employees,” commented Felix Marx, chief executive officer of SCM Microsystems. “Customers worldwide are calling for converged solutions for information security and physical access control, and that is creating demand for a broad set of devices from doors to desktops with support for smart cards, biometrics and contactless technologies. By combining our respective product lines and resources we can address the full spectrum of customer needs, making our combined company much more valuable to our customers.”

“The synergies in the companies’ product lines and the opportunities for new, highly integrated security products are tremendous,” stated Larry Midland, president of Hirsch Electronics. “There is virtually no overlap in the companies’ current lines, yet the products and technologies are extraordinarily complementary. And, in both our organizations’ DNA, we have a commitment to the customer and a clear focus on innovation, reliability, and company integrity. I believe this is an ideal match.” 

Following the merger, Mr. Midland is expected to join the board of directors of SCM Microsystems and will become an executive officer of the combined company.

The merger agreement has been approved by the boards of directors of both companies and is subject to the approval of both SCM’s and Hirsch's stockholders. The transaction is subject to other customary closing conditions, including the filing by SCM of a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”) with respect to the registration of shares of SCM common stock and warrants to be issued in the merger, and the declaration of its effectiveness by the SEC. The transaction is expected to close in the first half of 2009.

Following the merger, the combined company will be called SCM Microsystems and its common stock will continue to trade under SCM Microsystems’ name on both the U.S. NASDAQ and the Frankfurt Prime Standard exchanges. SCM and Hirsch products will continue to be marketed under their respective brand names.

Avondale Partners LLC acted as financial advisor to SCM Microsystems and its Board of Directors, and Gibson Dunn & Crutcher LLP is acting as legal counsel to SCM Microsystems in connection with the transaction. Imperial Capital LLP acted as financial advisor to Hirsch Electronics, and Palmieri, Tyler, Wiener, Wilhelm & Waldron LLP is acting as legal counsel to Hirsch in connection with the transaction.

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