Oberthur to acquire XPonCard
The Board of Directors of XPonCard has unanimously recommended XPonCard’s shareholders to accept the offer. Oberthur has already received irrevocable undertakings to accept the offer from shareholders representing approximately 50.7% of the shares in XPonCard. The bid is conditional on 80 % of the shares being tendered, on the absence of a rival bid and on Oberthur receiving external financing, which is already secured with Societe Generale. The acceptance period of the offer is expected to run between 12 March and 4 April 2008.
Stockholm-based XPonCard provides smart cards for all smart card market segments, with a special stress on Payment and Telecom segments. XPonCard comes from the merger of several players (and company name changes) in the Northern Europe card industry: AB Inplastor, ID Kort, data-z, ID Data Norway, Graphium, Paragon DZ Card, DZ Danmark, DZ Finland.
The company employs 420 people in 16 countries: It has offices in all Northern Europe countries and in Thailand, Russia, Poland, Estonia, USA, Latvia, Indonesia, Lithuania, United Arab Emirates, the Philippines, Nigeria, and Argentina. It has research and development resources in Denmark, Sweden, Russia, the United States and Thailand and service bureaus in Sweden and Latvia.
In 2006, XPonCard had been severely affected by the aggressive price context on SIM card ASP (Average Selling Price). The company had been obliged to restructure its Nordic production facilities, and to undergo a restructuring program to realign its cost structure. In 2007, XPonCard acquired ACSC, All Card Service Center, a Swedish company with a market presence in Baltic countries on the banking segment.
XPonCard is organized in two main Business Units:∑ "Nordikum", provides integrated solutions such as plastic cards, system development, graphics solution, distribution, card administration and outsourcing in Northern Europe region,∑ "Telecom Global", provides subscriber identity module cards, prepaid cards, customized applications and software platforms for mobile services on a global basis.
Oberthur says its merger with XPonCard would create the world's second largest smart card vendor behind Gemalto, with sales of approximately EUR 735 million. It adds that the deal will enable XPonCard to successfully face the ongoing globalization of both its customers (financial institutions and mobile operators) and their markets, which requires a global presence. It will also allow the firm to take advantage of Oberthur’s product portfolio and R&D resources.
Geographically, Oberthur and XPonCard complement each other in Europe in the banking and loyalty card segment. XPonCard provides a sales, service and personalization infrastructure in the Nordics, the Baltics and Poland to complement Oberthur’s extensive network throughout the rest of Europe. Outside of Europe, the combined resources will add scale and critical mass. Jean-Pierre Savare, chairman, Oberthur, says the acquisition will also extend the French firm's geographical reach: "XPonCard provides a perfect geographical fit in the Nordic and Baltic countries for Oberthur and we are impressed with XPonCard's successful development of value added services."
Oberthur says it intends to "retain a significant part of XPonCard's employees as part of the enlarged group going forward". But the firm also warns that it "is continuously seeking to optimize its cost base". Once the deal is concluded, Oberthur expects to integrate the two companies’ operations. In the Nordic, Baltic and Polish markets XPonCard will provide the cornerstone of Oberthur’s entry into these countries. In other markets, it is expected that XPonCard’s operations will be merged with Oberthur’s.