De La Rue buys smart card firm

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De La Rue, the banknote and cheque printing group, has acquired Philips's smart card division in a pounds 54m cash deal that will make it one of the leading players in the fast- growing smart card market. It is buying Philips Cartes et Systemes (PCS), a French subsidiary of the Dutch electronics group.

De La Rue has been keen to expand its interest in card-based payment systems. It is already a big producer of magnetic stripe cards. In 1993 it signed a joint venture with Philips to market smart cards.

"The acquisition of PCS will provide De La Rue with full access to smart card product technology to augment the company's traditional card printing and security skills," a spokesman said. Smart cards are seen as a rapidly growing market with Europe, and France in particular, at the forefront of new developments.

The company said the acquisition was not a defensive move to protect it from any longer-term decline in banknote use.

"There is still an enormous demand for banknotes but it is important for us to offer a choice of payments," the company said.

De La Rue and PCS have played a key role in developing smart card industry standards. De La Rue will focus on the emerging standards published by global card schemes such as UKIS, VisaCash, Mondex and Proton.

PCS has operations in Paris and Caen and employs 370 people. Last year it made a loss before tax of pounds 500,000 on sales of pounds 30.6m. Net assets as of 31 December were pounds 10.7m. It produces smart cards supplying the banking and pay TV industries. De La Rue hopes to exploit the convergence between banking, telecommunications and the expanding world of multi-media. De La Rue's smart card activities will trade under the name De La Rue Card Systems.

Last month the company announced 400 job losses in its security printing division, which produces banknotes, travellers' cheques, personal cheques and certificates. The pounds 15m restructure was one of the largest in the group's history.