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Seven months after it hired a financial adviser to explore strategic alternatives, credit card hologram maker American Bank Note Holographics Inc. has agreed to be acquired by JDS Uniphase Corp. for $138 million in cash and stock. Under the deal, announced Tuesday, ABNH shareholders will receive $5.15 of JDS common stock and $1 in cash. The offer purchase price represents a 10% premium to ABNH's closing share price on Monday of $5.60. ABNH, of Robbinsville, N.J., provides holographic images used for security purposes on credit and debit cards to thwart counterfeiting, producing the holographic dove that adorns many cards. In May the company hired Morgan Keegan & Co., a unit of Birmingham, Ala.-based Regions Financial Corp., to explore strategic alternatives. The acquisition adds to the counterfeit protection services JDS offers. In addition to providing optical variable coloring on U.S. and foreign currency, the Milpitas, Calif., company offers technology to prevent counterfeiting of passports and government IDs and corporate brands for pharmaceutical companies . "What we do really well is the high-end currency protection business, and ABNH protects credit and debit cards," said Patrick Higgins, director of business development for the advanced opticals division at JDS. "The combination of the two says that when you go out Christmas shopping this year, the way that you pay for your purchase will be protected by our technologies." Although ABNH's technology is popular, it has encountered problems. In the past year Visa Inc. and MasterCard Inc. temporarily stopped issuing cards with a holographic magnetic stripe, called a HoloMag, because of problems processing transactions. Higgins said these technical issues have been resolved, and the companies are testing the HoloMag technology. As compensation for the problems, ABNH on Dec. 4 agreed to serve as a sponsor of MasterCard Security and Risk Conferences, which includes paying the card issuer a fee of $125,000 a quarter through 2012. ABNH in 1999 was forced to restate financial results for 1996 through 1998 due to improper revenue-recognition practices, later settling legal claims against the company related to the restatement. For the first nine months of 2007, ABNH reported net income of $4.2 million on revenue of $23.7 million, compared with net income of $2.7 million on sales of $24.9 million for the year-ago period. The acquisition is the fourth for JDS in 2007 and the largest since it acquired optical components manufacturer Picolight Inc. in February for $115 million. In May the telecommunications gear maker also bought Innocor, a provider of broadband testing products for network equipment manufacturers, for undisclosed terms. It acquired Casabyte Inc., a provider for mobile network monitoring technology, in January for undisclosed terms. JDS did not use a financial adviser in connection with the deal, relying on internal counsel from Chris Dewees, Matt Fawcett, Andrew Pollack and Jeremy Liegl. Skadden, Arps, Slate, Meagher & Flom LLP's Thomas Ivey, Amr Razzak, Moshe Kushman, David Hansen and Lonny Block provided the company with legal advice. Morgan Keegan's Alper Cetingok served as financial adviser to ABNH, while Paul Jacobs, Steven Suzzan and Traci Tomaselli of Fulbright & Jaworski LLP provided counsel.  Deal Video
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