Apple Inc., maker of the iPad and iPhone, agreed to acquire AuthenTec Inc. for about $350 million, gaining fingerprint-authentication technology.
Apple is paying $8 a share in the deal, AuthenTec said today in a filing. The transaction represents a premium of 58 percent over AuthenTec's closing share price yesterday. Under the agreement, Apple also has the right to pay patent licenses totaling as much as $115 million.
The deal would help Apple shore up its biometric features, which help maintain security on devices. The company is under pressure to speed up its product development cycle as competition in mobile technology increases, according to investor Michael Obuchowski, a portfolio manager at North Shore Asset Management LLC. Apple shares fell 4.3 percent on July 25 after quarterly iPhone sales missed analysts' projections, underscoring the need for a new model.
"Mobile devices are becoming more internet and data centric, which means they are no different in some ways than a PC, which exposes them to risks related to security," said Anil Doradla, an analyst at William Blair & Co. who has a buy rating on Apple's shares. "By acquiring this company, Apple is basically going after the security portfolio."
AuthenTec's shares rose 61 percent to $8.17 at 9:42 a.m. in New York, and earlier climbed as high as $8.19, suggesting investors may anticipate another bid. Apple was little changed.
Samsung Electronics Co., the world's largest maker of mobile phones, might consider bidding for AuthenTec, said Richard Shannon, an analyst at Craig-Hallum Capital Group, who has a buy rating on AuthenTec's shares. Like Apple, Samsung may need to upgrade security features on its devices, he said.
"Samsung is the only one who could realistically buy AuthenTec and outbid Apple," Shannon said in an interview.
The deal, which still requires the approval of shareholders and regulators, is expected to close in the third quarter of this year, according to the filing. AuthenTec would pay Apple a breakup fee of $10.95 million if it accepts a superior proposal.
Apple has announced 12 purchases in the past five years with an average size of $1.23 billion and a typical premium of 71 percent, according to data compiled by Bloomberg, which included prices for only four of the transactions.
The biggest was the $4.5 billion purchase of a patent portfolio from Nortel Networks Corp. last year, which Apple did jointly with Microsoft Corp. and other technology companies.
Piper Jaffray & Co. was AuthenTec's financial adviser, with Alston & Bird LLP acting as legal adviser.
AuthenTec's customers include Nokia Oyj, Cisco Systems Inc., and Samsung, according to the company's website. The Melbourne, Florida-based company was founded in 1998 and had its U.S. initial public offering in July 2007.
Steve Dowling, a spokesman for Cupertino, California-based Apple, said "Apple acquires smaller technology companies from time to time. We generally do not disclose our purpose or plans." He declined to comment further.
Brent Dietz, a spokesman for AuthenTec, and Teri Daley, a spokesman for Samsung Mobile USA, didn't immediately return calls seeking comment.