Apple To Buy AuthenTec For About $355 Mln. - Update

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7/27/2012 2:20 PM ET

Apple Inc. (AAPL: Quote) has agreed to acquire AuthenTec Inc. (AUTH), a mobile security company, for about $355 million. The acquisition will help Apple improve security features of its products as well as increase its patent portfolio.

Apple will pay $8 a share to AuthenTec's shareholders, representing about 60 percent premium to the company's closing price on Friday. Shares of AuthenTec is currently up 66 percent above the offer on the Nasdaq. The deal still requires approval from AuthenTec shareholders, while the Board has already approved the transaction.

With the acquisition, Apple has decided to open its huge horde of cash reserves for investment in growth areas. The $350 million deal is one of Apple's biggest acquisition, but the transaction amount represents only a fraction of its cash reserves, which is currently estimated at $117 billion.

AuthenTec designs fingerprint sensors primarily used in computer and mobile devices, and also touch-based sensors for government and access control applications. The acquisition will enable Apple to improve security features of its iPhones, iPads and Macs.

As per the agreement, Apple will have to pay AuthenTec $20.0 million for the right to acquire "non-exclusive licenses and certain other rights with respect to hardware technology, software technology and patents of the company." Apple will have 270 days to choose to license certain hardware and software technology and patents on a perpetual, non-exclusive basis for up to $115.0 million.

The deal also details that AuthenTec would have to pay $11 million if it accepts any superior proposal from any other company. Meanwhile, Apple would have to pay $20 million if the acquisition fails to complete due to any regulatory or anti-trust issues.

Apple on Tuesday reported a 21 percent increase in profit for the third quarter, as sales rose 23 percent. Nevertheless, Apple's quarterly earnings and revenues missed analysts' estimates, due mainly lower-than-expected iPhone sales.

AUTH is currently trading at $8.29, up $3.32 or 65.48%, on a volume of 16.5 million shares, above the three-month average volume of 0.8 million.

AAPL is currently trading at $579.61, up $4.73 or 0.82%, on a volume of 7.5 million shares.

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by RTT Staff Writer

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