Safran’s Morpho Said to Fetch More Than $2.2 Billion in Bid War

(Bloomberg) -- Safran SA is likely to receive bids valuing its biometric security unit Morpho at more than 2 billion euros ($2.2 billion), as five potential buyers submit offers by Friday, according to people familiar with the matter.

The Paris-based aerospace and defense company is looking for the highest all-cash bid and is aiming to pick a buyer within a few weeks, the people said, asking not to be named discussing confidential talks. Safran wants bidders to improve on earlier offers, which ranged from 2.1 billion euros to 2.3 billion euros in July, and thinks it can fetch an enterprise value of 2.5 billion euros at the very most, one of the people said.

Safran is seeking to sell Morpho, a unit that makes high-tech identification tools for governments and investigative software for police forces, to focus on its core business in aircraft and rocket engines. The company has said it’s weighing all options for Morpho and will decide on one by the end of the year.

Analysts at Exane BNP Paribas and Natixis Securities have estimated Morpho’s valuation at 2 billion euros, which is from 10 to 16 times estimates for earnings before interest and taxes.

Potential buyers include Gemalto NV, Advent International Corp., which owns Oberthur Technologies, and three private-equity groupings led by KKR & Co., Bain Capital and CVC Capital Partners Ltd., respectively. With the offers all within a tight range, according to people familiar with the process, the bidders are now seeking to shift the contest to focus on regulatory hurdles, and government guarantees on jobs and security issues.

Representatives for Gemalto and Safran declined to comment. Advent, KKR, CVC and Bain Capital didn’t immediately respond to calls and e-mails requesting comment.

Reassuring Governments

Any deal may face hurdles from antitrust authorities and government agencies in France and the U.S., the people said. Both governments will be concerned about protecting the sensitive data that’s part of Morpho’s contracts, investing in research and development, and keeping jobs, they said. Buyers based outside France could face particular scrutiny because Morpho is part of a strategic industry, one person said.

Morpho’s main rivals include Cogent Inc. and Japan’s NEC Corp. 3M Co. acquired Cogent for $662 million in 2010, valuing the U.S. biometrics company around 24 times its earnings before interest and taxes at the time, according to data compiled by Bloomberg.

--With assistance from Helene Fouquet Andrea Rothman and Ruth David To contact the reporters on this story: Marie Mawad in Paris at mmawad1@bloomberg.net, Alexandre Boksenbaum-Granier in Paris at aboksenbaumg@bloomberg.net, Manuel Baigorri in London at mbaigorri@bloomberg.net. To contact the editors responsible for this story: Geraldine Amiel at gamiel@bloomberg.net, Molly Schuetz, Andrew Pollack