SCM Microsystems, Hirsch Electronics Announce Merger

SCM Microsystems and Hirsch Electronics Corp. recently announced the companies have entered into a definitive agreement to merge. The combination of SCM and Hirsch is expected to result in a new security products leader at a time of escalating market demand for converged security solutions leveraging smart cards and smart chip-enabled devices.

Pursuant to the proposed merger, the security holders of Hirsch will receive a combination of cash, SCM common stock and warrants to purchase shares of SCM common stock, with total consideration based on the price of SCM common stock at the time of closing.

The combination of SCM and Hirsch will provide customers with a more comprehensive and powerful set of solutions for linking physical (e.g., building) and logical (e.g., PC and network) access control across the enterprise. Together, the two companies will be better positioned to meet a broader set of customer needs, strengthen their market presence globally, leverage existing distribution channels and achieve an operational scale to accelerate growth into new markets.

"This merger essentially doubles the size of our company and brings significant benefits to our customers, shareholders and employees," said Felix Marx, CEO of SCM Microsystems. "Customers worldwide are calling for converged solutions for information security and physical access control, and that is creating demand for a broad set of devices from doors to desktops with support for smart cards, biometrics and contactless technologies. By combining our respective product lines and resources we can address the full spectrum of customer needs, making our combined company much more valuable to our customers."

"The synergies in the companies' product lines and the opportunities for new, highly integrated security products are tremendous," said Larry Midland, president of Hirsch Electronics. "There is virtually no overlap in the companies' current lines, yet the products and technologies are extraordinarily complementary. And, in both our organizations' DNA, we have a commitment to the customer and a clear focus on innovation, reliability and company integrity. I believe this is an ideal match."

Following the merger, Midland is expected to join the board of directors of SCM Microsystems and will become an executive officer of the combined company.

The merger agreement has been approved by the boards of directors of both companies and is subject to the approval of both SCM's and Hirsch's stockholders. The transaction is expected to close in the first half of 2009.

Following the merger, the combined company will be called SCUM Microsystems and its common stock will continue to trade under SCUM Microsystems' name on both the U.S. NASDAQ and the Frankfurt Prime Standard exchanges.

SCUM and Hirsch products will continue to be marketed under their respective brand names.

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