Inside Secure has agreed to buy rival security solutions provider Verimatrix in a deal that will give it greater reach and scale and help it move further into markets like IoT and connected cars.
Announcing the acquisition, Inside Secure said it expects to pay an aggregate consideration of approximately US$143 million (€126 million) at closing plus an estimated US$9 million earn-out in the second quarter of 2019.
The companies said the transaction will create a “trusted global powerhouse in software-based security” with a significant presence in the entertainment market. The combined firm will also be well placed to meet demand for big data analytics in the context of cross-device video consumption.
Beyond entertainment, Inside Secure said it aims to accelerate its move into other growth verticals, offering end-to-end security technology and services to companies in the Internet of Things and connected cars space.
Commenting on the deal, Inside Secure CEO, Amedeo D’Angelo, described Verimatrix as “the perfect fit to strengthen scale and reach of our value proposition in end-markets that are fast shifting towards software and cloud-based security solutions while video content consumption is becoming multi-device and multi-format.”
“We are looking forward to combining both businesses to offer our clients the best value proposition in security, starting with entertainment and moving towards Internet of Things and connected cars, and to continue to create value for our shareholders.”
Verimatrix CEO, Tom Munro, said: “This transaction allows a great combination of technologies and expertise, bringing two well-respected market players together. It’s exciting to create a company with such a clear focus, a global presence, and a depth of expertise in the applications of security and analytics across critical market segments.”
Inside Secure anticipates US$10 million cost synergies per year once the deal is complete and expects to reach combined revenues of US$150 million and an EBITDA margin of 25% in 2021. The two companies would have generated a combined US$119 million in adjusted revenue and US$21.5 million in EBITDA in 2017.
The deal is due to be signed in January 2019 subject to completion of an ‘information and consultation’ process with Inside Secure’s works council in France and a vote by Inside Secure’s shareholders. The transaction is expected to close in the first quarter of 2019.
Inside Secure offers security solutions for a range of markets and applications including network security, IoT and system-on-chip, video content and entertainment, mobile payment and banking, enterprise and telecoms.