About Authentec

While many people are concentrating on other ramifications of the Apple-Authentec deal (the Times of India entitled its piece Apple buys Samsung's mobile security supplier AuthenTec for $356m), I am more interested in the biometric portion of the deal.

Authentec has been around since 1998 and has been a public company since 2007. It is best known for its fingerprint sensors for personal computers and mobile devices, which provide a level of fingerprint biometric security to those devices. It's not necessarily to the level used by the FBI and other large-scale organizations, but you usually don't need that level of biometric quality on your computer or phone.

Before the Apple deal was revealed, Authentec talk was centered around this recent deal:

Alcatel-Lucent (euronext paris and nyse:ALU), and AuthenTec are jointly supporting Portugal Telecom (PT) in the launch of 'Meo Go!'. The new Meo Go! service enables subscribers of Portugal Telecom - the largest communications service provider in Portugal - to use their smartphones and tablets to access content that was previously confined to their TVs and PCs, including 60 live TV channels and video-on-demand.

The Meo Go! service is available to subscribers using Android, Apple iOS and Windows-based smartphones and other mobile devices, and includes features to ensure secure delivery and smooth playback of a variety of different video content formats.

As you can see from the press release excerpt, Authentec works with a variety of technology players, including Apple and its competitors (fierce competitors in some cases).

If the deal is approved, Apple can do one of two things. It can either treat Authentec as a semi-separate entity that provides its products to all vendors, or it can concentrate on integrating the Authentec product line into Apple products only. The SEC filing, written from the perspective of Authentec, doesn't say what will happen, since Authentec does not know what Apple will do with the company once it owns it. And Apple isn't telling.

PROJECT BRYCE INVESTOR Q&A

1. What was announced today?

Apple and AuthenTec have entered into a definitive merger agreement under which Apple will acquire AuthenTec for $8.00 per share. Certain information regarding the transaction can be found in the Form 8-K filed by AuthenTec with the Securities and Exchange Commission on July 27 and additional details will be provided in the proxy statement AuthenTec will file with the Securities and Exchange Commission.

2. Why is Apple buying AuthenTec?

AuthenTec cannot comment on Apple’s intentions.

3. As a shareholder of AuthenTec, what will I receive?

Each shareholder of AuthenTec will receive $8.00 for each share of AuthenTec stock that they own, which represents a 56.9% premium to AuthenTec’s closing share price on the day prior to the announcement of the acquisition.

4. What will happen to AuthenTec’s existing businesses?

Apple will implement its plans for AuthenTec’s businesses after the transaction closes.

5. What will happen to AuthenTec’s employees?

AuthenTec cannot speak to Apple’s intentions. In any event, we do not expect any public comment on future plans with respect to employees.

6. When do you expect the acquisition to close?

The acquisition is subject to customary closing conditions, including regulatory approval and AuthenTec shareholder approval. Subject to satisfaction of those conditions, we expect the merger to close in the third calendar quarter of this year.

7. Are there any closing conditions?

The deal includes customary closing conditions, including regulatory approval and AuthenTec shareholder approval. Please refer to the merger agreement attached as an exhibit to the Form 8-K filed by AuthenTec with the Securities and Exchange Commission on July 27.

8. What regulatory approvals are needed?

The acquisition is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act and certain foreign antitrust laws. Additional details will be provided in the proxy statement AuthenTec will file with the Securities and Exchange Commission.

9. What does this acquisition mean for existing AuthenTec customers?

AuthenTec’s current customers are encouraged to reach out to their sales representative at AuthenTec. We cannot comment on Apple’s future plans for AuthenTec’s business.

10. Did AuthenTec hire an investment banker? If so who?

AuthenTec engaged Piper Jaffray & Company.

11. Will management be hired by Apple?

AuthenTec cannot speak to Apple’s intentions. In any event, we do not expect any public comment on future plans with respect to employees.