Cogent holds key homeland security contracts in areas such as border control and airline passenger screening.
In an effort to broaden its footprint in the market for security and identification products, 3M Co. has agreed to acquire Cogent Inc., a Pasadena-based provider of biometrics systems that focuses largely on public sector agencies in law enforcement and homeland security.
Under the deal, disclosed Monday, 3M will acquire all of Cogent's outstanding shares at $10.50 per share, a premium of 18% over Friday's closing price of $8.91. The agreement, subject to shareholder's acceptance and other conditions, is expected to close in the fourth quarter, 3M said.
Cogent shares were up 21.03%, to $10.79, in early afternoon trading Monday. That its shares were trading above 3M's offer was a sign investors believe other vendors might try and top 3M's offer, a move that could kickstart a bidding war akin to Dell and HP's contest to acquire storage company 3Par.
3M's shares were off .75%, to $80.39, as it cautioned the deal would reduce earnings by $0.09 to $0.10 in the first year.
3M officials said acquiring Cogent would bring their company deeper into key growth markets like border and airport security. "Cogent Systems has done a tremendous job establishing a strong presence in the biometric industry," said Mike Delkoski, VP and general manager for 3M's Security Systems Division, in a statement.
"Adding Cogent Systems products to our business strengthens our product portfolio and services in high security credential issuance and authentication systems and positions 3M's business in law enforcement applications. It also expands our reach into access control and other commercial ID and authentication applications," said Delkoski.
The U.S. Department of Homeland Security is a key Cogent customer. Cogent has teamed with ARINC, FLO Corporation, and International RAM to develop the iQueue pre-approved traveler program for use at airport security checkpoints around the country.
Other Cogent customers include New York State, the UK national post office, and the Belgian federal police department.
Cogent founder and CEO Mingh Hsieh is expected to remain with the organization following completion of the acquisition. "3M can accelerate our growth and extend our reach in global border control markets, law enforcement and commercial applications," said Hsieh, in a statement.
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