Apple to buy AuthenTec for $356 million

It is not, however, a done deal. The Securities and Exchange Commission 8-K filing includes the “customary ‘no-shop’ restrictions” prohibiting AuthenTec from seeking an alternative buyer. Nevertheless AuthenTec shares rose to $8.42 on Nasdaq following news of the agreement, suggesting that the market either expects alternative bids, or that shareholders will force a higher price from Apple.

The acquisition “gives Apple a number of things including access to AuthenTec’s expertise with embedded fingerprint sensor technology,” Alan Goode, founder and MD of mobile security specialists Goode Intelligence, told Infosecurity. But it’s not just about fingerprints. “Over the last few years [AuthenTec has] built up their portfolio with a number of strategic acquisitions that have made them a force to reckon with in the mobile security market. The recent announcement of a partnership with Samsung for mobile VPN technology is one area they have strength and they are also leaders in mobile DRM solutions. All of these solutions could be used by Apple to make it an even more formidable player in the enterprise mobility industry.”

Nevertheless, it is the fingerprint technology that is provoking most immediate interest. Apple’s closed architecture has, to date,  prevented any serious third-party development for iOS (AuthenTec’s mobile security is largely aimed at the Android market). However, by owning the technology, Apple can integrate biometric authentication and VPN technology into the heart of future iPhones and iPads while keeping its garden still fully walled. Paradoxically, this is likely to stimulate the mobile biometric market in general – with biometric protection on iOS devices, Android manufacturers may feel compelled to do the same.

“There have been many rumors on whether iPhone 5 will include some form of biometrics including a number of patents that Apple have filed,” said Goode. “This deal may be too early to see fingerprint sensors in the next gen iPhone and iPad but we may well see something in later versions.”

Once a fingerprint sensor is part of the device itself, it is likely to be rapidly accepted by users. Firstly it is generally accepted as a secure form of user authentication, while secondly it is much easier to touch a sensor than to remember and input a long, strong password. This inherent ease of use will make it a security device that end-users in the BYOD market will not seek to by-pass – making it particularly attractive to business and a realistic business alternative to the struggling RIM Blackberries. Combined with an IPsec VPN, it turns the iPad into a secure, mobile, end-point device for the enterprise.

After the agreement was announced, AuthenTec’s shares increased 66% ($3.35) to $8.42 on Nasdaq. Apple shares also rose by $10.28 to $585.16.

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