Apple Ups Mobile Security, Buys AuthenTec for $356 Million

Apple (NASDAQ: AAPL) will use $356 million of its nearly $120 billion cash hoard to snap up AuthenTec (NASDAQ: AUTH), a 217-employee, Melbourne, Fla.-based mobile security vendor. The deal will pay AuthenTec’s shareholders $8 per share or a 60 percent bump over Thursday’s $5.07 closing price.

AuthenTec, founded in 1998, makes fingerprint sensors and identity management software. The company, which has strategically redirected to focus on mobile security, lists Samsung, Fujitsu and LG among its mobile customers. According to its 2011 10-K filing, its top five customers accounted for 43 percent of its revenue last year. For AuthenTec’s smart sensor technology, Lenovo, at 16 percent, is its biggest customer.

The deal has some immediate irony to it. Two weeks ago, AuthenTec signed on to provide Samsung, with which Apple is engaged in the mother of all patent infringement wars, to deploy its QuickSec Mobile VPN Client for Android in the Korean manufacturer’s upcoming smartphones and tablets. That deal easily could have threatened Apple, given the heavy BYOD and mobile device management trendlines in the workplace, especially as iPhones and iPads creep into the enterprise.

The deal is mega-important to Apple on a number of levels. First, the below the surface war between Apple and Android resides in the enterprise, where both are running off RIM. Anything Apple does to derail the competition in big business accounts matters now but will carry even more consequences later on.

Another reason is the security-as-the-mobile-linchpin for enterprise IT. This deal gives Apple a solid position to ease big businesses’ real security concerns about smartphones and tablets while leaving those questions alive about Android, and, by association, Samsung. It’s not a stretch to figure that Apple soon will leverage AuthenTec’s expertise to build enterprise-level security features into the iPhone and iPad. And, to the extent that channel partners can get their hands on the iPad for enterprise sales, the deal could open new opportunity doors.

According to one online report, Apple may have hinted at the AuthenTec deal just last week when it reported its Q2 results, referencing the iPad’s tripled numbers among Fortune 500 companies and the iPhones doubling among the same audience. Guess it pays to listen.

According to AuthenTec’s 8-K filing, Apple will pay $20 million for the right to buy non-exclusive licenses and will have about nine months to decide to license certain technology and patents on a non-exclusive basis for up to $115 million. Should AuthenTec accept a better deal, it will be on the hook to Apple for $10.95 million but if the transaction is snagged by some regulatory issue, Apple will owe AuthenTec $20 million.