ActivCard swipes credential manager

FREMONT, Calif.--Digital identity systems firm ActivCard Corp. acquired Canberra, Australia-based Protocom Development Systems, a privately held supplier of credential management products, for $21 million in cash and 1.65 million shares of common stock in August. The two companies have competed against one another and partnered for various projects. Beginning last year, ActivCard and Protocom joined forces to develop access identity control applications for British Telecom and the World Bank. ActivCard, which is publicly held, develops hardware and software for strong authentication applications. The company's products offer a secondary layer to access control systems to ensure a person's identity. Software developer Protocom supplies single sign-on products used, for example, to log on to computer systems and all applicable programs at once. "The acquisition of Protocom definitely strengthens our management team and it will help attain profitability quicker," said Aaron Zitzer, director of marketing at ActivCard. ActivCard was founded in France in 1988. The company relocated its corporate headquarters here in 2003, to be closer to one of its biggest customers, the U.S. government. ActivCard reported $38 million in revenue for the calendar year 2004. Of which, according to Zitzer, 60 percent was earned in the United States. The company projects fiscal 2006 revenues to jump to approximately $70 million, as a result of the deal. Protocom targeted the U.S. market before the deal. ActivCard executives said the overall headcount of the merged companies would be reduced by 13 percent, in an effort to reduce expenses and achieve profitability. The majority of the layoffs will be complete by the end of September. "There were some overlaps in the businesses," said Zitzer. "This will also help us increase our scale globally because it will help us provide better support around the world." The restructuring will result in approximately $11 million per year in savings, the company said. Staff in sales, marketing, administration and product development will be affected. The company will also consolidate facilities. Protocom targets customers in the healthcare, government, finance and commerce industries. U.S.-based healthcare customers include Maine Medical Center, Gundersen Hospital and Wellstar Health Systems. The company has regional offices in Sacramento, Calif., and Brielle, The Netherlands. Ben Barnes will remain chief executive officer of ActivCard once the deal closes. Protocom founder and Chief Executive Officer Jason Hart will assume the role of senior vice president of sales and marketing, reporting to Barnes.