Smart card solutions developer OTI - On Track Innovations (Nasdaq:OTIV; XETRA:OT5) announced that it has finalized the sale of its wholly-owned German subsidiary, InterCard Kartensysteme GmbH for approximately $2.5 million.
OTI will retain its profitable InterCard Systemelectronic GmbH subsidiary, which provides OEM and electronics manufacturing services.
The subsidiary sold is engaged in the sale and support of closed campus systems, which is considered to be a highly competitive market with relatively low margins and high operating expenses.
The sale of InterCard Kartensysteme follows OTI's acquisition of ASEC S.A. of Poland. Since being acquired, ASEC has received some orders valued at approximately $1.5 million for 2500 contactless reader equipped terminals.
OTI stated that the transactions are expected to improve the company's long-term profitability, with some decrease in revenues in the short term, by adding a profitable company with higher margins and recurring revenue businesses and by selling an existing division with high operating expenses.
OTI president and CEO Oded Bashan said, "The sale of InterCard Kartensysteme GmbH is reducing operating expenses and debt and saving significant resources, while the acquisition of ASEC is introducing OTI to new and growing clients within the emerging European countries market. These actions are in accordance with OTI's strategy to focus on three vertical markets - payment, petroleum and smartID - where we provide complete solutions that adhere to our higher margin and recurring revenues business model."
Established in 1990, OTI designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, micropayments, mass transit ticketing, parking, loyalty programs and secure campuses. Major clients include: MasterCard International, Atmel, BP, Scheidt & Bachmann, EDS, Repsol, and the Government of Israel.
Published by Globes [online], Israel business news - www.globes.co.il - on Wednesday, January 19, 2005