AuthenTec Acquisition by Apple Explained

AuthenTec, a company known for its fingerprint recognition technology, was acquired by Apple in 2012 for a whopping $356 million. This acquisition marked a significant milestone in the history of AuthenTec.

The acquisition was a strategic move by Apple to enhance its mobile security capabilities. AuthenTec's expertise in fingerprint recognition technology was a key factor in this decision.

Apple's acquisition of AuthenTec paved the way for the development of Touch ID, a fingerprint recognition system that would become a standard feature in future Apple devices. This technology allowed users to securely unlock their devices with a simple fingerprint scan.

The acquisition also brought significant changes to AuthenTec's operations, with the company's assets and employees being absorbed into Apple's fold.

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AuthenTec was acquired by Apple for approximately $356 million, with Apple paying $8 per share, a 58 percent premium to the closing price on the previous Thursday.

The deal was unanimously approved by AuthenTec's board and requires approval from a majority of the holders of the Melbourne, Florida-based company's stock, which totals about 44.5 million outstanding shares.

Apple's acquisition of AuthenTec was announced on May 8, 2012, after negotiations between the two companies that began in late February 2012.

AuthenTec's stock jumped $3.25, or 64 percent, to $8.32 in Friday afternoon trading, above Apple's offer, suggesting investors thought there would be a higher bid for the company.

A higher offer for AuthenTec is possible, but if it does wind up accepting a superior offer, it would have to pay a breakup fee of approximately $11 million.

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AuthenTec, a company that counts several major tech firms among its customers, approached several leading consumer electronics companies with its new technology in late 2011.

The technology was offered to several companies, but Apple was the only one that expressed interest in developing it.

Apple's interest in the technology was driven by its desire to use it in its own products.

Negotiations over a commercial agreement began in late February 2012, but Apple decided to change course on May 1, 2012, and propose an acquisition of AuthenTec instead.

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Apple offered a price of $7.00 per share, valuing AuthenTec at a 115% premium over its previous closing price.

The acquisition was motivated by Apple's need for a new technology that would enhance the security of its devices.

AuthenTec's technology, including fingerprint sensors, encryption tools, and more, would provide Apple with the necessary security features to protect its users' data.

Apple's acquisition of AuthenTec was a strategic move to prevent its competitors from accessing the technology.

The deal was finalized after AuthenTec countered Apple's initial bid of $7.00 per share with a demand of $9.00 per share, and Apple agreed to meet it halfway at $8.00 per share.

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Apple bought AuthenTec for approximately $356 million to strengthen its digital security capabilities.

AuthenTec's fingerprint sensors offer a way to secure handsets, which is becoming increasingly important as consumers use their smartphones for more daily activities, including shopping.

The deal was unanimously approved by AuthenTec's board, but it still requires approval from a majority of the holders of the Melbourne, Fla., company's stock.

AuthenTec's stock jumped $3.25, or 64 percent, to $8.32 in Friday afternoon trading, above Apple's offer.

Apple is paying $8 for each of AuthenTec's common shares, a 58 percent premium to their closing price on Thursday.

If AuthenTec does wind up accepting a superior offer, it would have to pay a breakup fee of approximately $11 million.

Apple's acquisition of AuthenTec comes as consumers increasingly use their smartphones for more activities, including shopping, making security a top priority.

AuthenTec's fingerprint sensors are used for security and identification purposes, and are embedded in computing devices.

The company had just signed a deal with Samsung to cover security and device management services for Android devices.

Apple's top execs have been hesitant about diving into mobile payments due to security concerns, but AuthenTec's fingerprint sensors could help with that by providing an added layer of security.

Apple might use AuthenTec's fingerprint sensors to manage passwords for other apps and websites, something that HP already uses AuthenTec for with its PCs.

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AuthenTec's encryption technology is used by companies like Samsung to offer better security for user's data when accessing the Internet or a VPN with the device.

Apple might follow in Samsung's footsteps and incorporate AuthenTec's encryption technology directly into the hardware to boost data security for products like the iPhone and iPad.

Discussions between AuthenTec and Apple began “late in 2011,” when AuthenTec approached “several leading consumer electronics companies” to gauge interest in its new technology.

Apple was the only company that expressed interest in developing the technology, likely due to cost concerns.

Negotiations over a commercial agreement began in late February 2012, but Apple shifted gears and proposed an acquisition deal on May 1, offering $7.00 per share for AuthenTec.

Apple believed its price was “very attractive” as AuthenTec would face challenges developing new technologies for its rivals with dozens of different smartphone platforms.

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AuthenTec is set to be acquired by Apple, with shareholders still to vote on the deal. Apple wants to use AuthenTec's fingerprint technology in its new products.

The deal involves royalties, patent licensing, and exclusive use of the technology. AuthenTec must continue working on the technology, regardless of whether the deal is completed.

Apple is rumored to be launching a new iPhone next month, and a 7.85-inch iPad is also on the horizon. The fingerprint technology will likely make its way to one of these products.

AuthenTec specializes in security products and software that could have been used in Apple's production line or code branches.