De La Rue tightens authentication focus with ID unit sale

The reshaping of De La Rue continues with the announcement this morning that it will sell its international identity solutions business to US rival HID Global.

The £42m ($53m) deal – due to complete in the third quarter – covers De La Rue’s current ID contracts, associated software and passport assembly facilities in Malta, as well as certain printing contracts for security documents such as visas and birth/death/marriage certificates.

It sharpens the UK group’s focus on the areas it considers to have the best growth potential, including its product authentication and traceability (PAT), security features and polymer banknote businesses, and continues its pivot away from its traditional manufacturing-focused business.

De La Rue said the divested business brought in sales of around £38m in the last fiscal year. The company is retaining the identity-related security features and components parts of the ID business that dovetail with its other business units. The ID business as a while made £78m in fiscal 2018-19.

The deal comes shortly after De La Rue chief executive Martin Sutherland announced he would be standing down after five years in the role, and after he implemented a cost-reduction programme at the company that aims to cut £20m off its annual spending by fiscal 2022. It also follows the loss of the contract to produce the UK passport.

Sutherland said that exiting the end-to-end identity solutions market “is the right one for the group and will deliver the most value to shareholders”, and will free up resources to invest in its growth areas.

“Focusing on the ID-related security features and components is in line with our strategy to transform De La Rue to an asset light and more technology-led business,” he added. The company said last November it intends to double the size of its authentication business within three years, thanks in part to growing demand in the pharma and tobacco sectors.

De La Rue is selling the business to HID Global’s Swedish parent ASSA ABLOY Group, which said the transaction would “enhance its position in citizen ID…and provide complementary growth opportunities.”

After the deal closes, De La Rue’s ID solutions business will become a part of HID’s citizen identity unit, which is led by Jessica Westerouen van Meeteren.