Nanotech Security agrees $73m takeover by Meta Materials

Canada's Nanotech Security Corp, a specialist in nano-optic security features, will be acquired by Meta Materials in a deal valuing the company at around C$91 million ($73m).

Under the terms of the deal, a subsidiary of Meta will take 100 per cent ownership of Nanotech at a price of C$1.25 per share in cash, and is expected to close in early October, pending approvals Nanotech shareholders and the authorities in British Columbia where the company is based.

Nanotech reported its third quarter results on the same day as the merger announcement, reporting sales of just over C$6 million in the first nine months of 2021, up 27 per cent on the same period of 2020.

For Nasdaq-listed Meta, the deal gives it an immediate present in security features and brand protection, adding to its current focus on functional materials and nanocomposites for the electronics, health, aerospace, automotive and energy sectors, based on technologies like holography, lithography and wireless sensing.

Both companies make nanostructured functional films, so have complementary expertise and technologies, and Meta said on a conference call to discuss the takeover that it expects to see revenues driven by applications in the banknote business.

Meta's chief executive George Palikaras said the deal would be transformative, allowing it to not only access new markets but also accelerate its manufacturing scale up and add around 50% to its intellectual property portfolio, swelling from around 140 to 210 patents.

"Nanotech has decades of experiences producing millions of square metres of security features with a quality and consistency required by some of the most demanding customers in the world," he told investors.

Nanotech CEO Troy Bullock – who will have an advisory role if the transaction completes – said that the company's Lumachrome security feature has been used in more than 30 banknote denominations worldwide, addressing a market valued at around $2bn a year.

In 2017, the company picked up a C$30m development contract with a top-10 central bank for a unique nano-optic security feature that will be used on a future banknote. The next phase in that contract is being discussed and could be announced late this year, he added.

In the $3.9bn brand protection category – estimated to be on course to double in size to $7.7bn in 2026 – Nanotech is providing security features for things like events tickets and sports merchandising. Earlier this year, the company launched its LiveOptik PROTECT security foil for the brand protection market.

Palikaras said that bringing the two companies' technology platforms together could also open up new opportunities in areas like solar anergy, 5G communications, battery and fuel cell systems, and carbon capture materials.