Apple's AuthenTec offer a strategic move

Adrian Drury/ Ovum
09 Aug 2012

Apple has made a bid to acquire AuthenTec, a mobile encryption and security specialist.

This acquisition is notable not just because Apple finds it notoriously difficult to spend its growing cash pile, but also because AuthenTec inked a deal in July to provide its fingerprint authentication and VPN technology for Samsung Android devices destined for the enterprise.

While this deal will give Apple technology assets to reinforce its security credentials in the growing enterprise markets for iOS, this deal is not just about secure corporate data on smartphones. AuthenTec technology also has application for across Apple’s App Store, iTunes, and future mobile e-voucher and payment services. It adds up to an attractive portfolio of intellectual property, as well as a blocking move against Samsung.

This isn’t Apple’s first date with AuthenTec

An 8-K filing by publicly-traded AuthenTec revealed it had received a bid at 58% over its closing price on the day of the filing, July 26, 2012, for a total consideration of $356 million. AuthenTec has an interesting customer base in the mobile handset market. In July it announced a partnership with Samsung that would enable Apple’s dominant rival in the smartphone market to bundle AuthenTec’s VPN technology with Samsung smartphones destined for enterprise use.

Also buried within the 8-K filing was information that, independent of its bid for ownership of the company, Apple has paid $20 million for the rights to license technologies from AuthenTec and is allowed to license the patents for these technologies for up to $115 million. Apple will also pay AuthenTec $7.5 million for “non-recurring engineering services,” with any new research conducted by the company immediately belonging to Apple.

AuthenTec also counts Alcatel-Lucent, Cisco, Fujitsu, HP, Lenovo, LG, Motorola, Nokia, Orange, and Texas Instruments among its customers.

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