Wireless Applications

EFJ Acquires 3e Technologies

July 11, 2006

Merger brings secure wireless data to EFJ's private wireless business and strengthens the market position of the company's secured-communications segment.


IRVING, Tex. /PRNewswire-FirstCall/ -- EFJ Inc. announced that it acquired 3e Technologies International (3eTI), a privately held, Maryland-based company. 3eTI is a technology company that offers security solutions for wireless platforms, such as WiFi, mesh networking, and Bluetooth. 3eTI also develops and sells secure wireless infrastructure that meets Federal Information Processing Standards, FIPS 140-2-validated, 802.11i-compliant wireless networking standards.

3eTI was founded in 1995 and currently has 95 employees located in the U.S. and Taiwan. For the 12-month period ending May 31, 3eTI had revenues of approximately $24 million. 3eTI also provides security solutions for wireless sensor networks, radio frequency identification (RFID), wireless video surveillance, and location-based context-aware solutions based on its wireless application middleware.

"We are pleased to announce the acquisition of 3eTI," stated Michael E. Jalbert, EFJ Inc. chairman and chief executive officer. "3eTI is a strong fit for EFJ Inc. This acquisition adds to our portfolio of secure wireless products for public safety and public service. 3eTI brings secure wireless data capability to our private wireless business and strengthens the market position of our secured communications segment with digital data security," Jalbert added.

"We believe the market opportunity for 3eTI's products and technologies is significant. To take advantage of this growth opportunity, 3eTI has developed a strong partnership with Cisco Systems. We look forward to continuing that partnership," said Jalbert.

"We anticipate this transaction being accretive to our earnings per share in 2007," Jalbert stated.

"3e Technologies has been, and will continue to be, an important wireless security solutions partner for Cisco," said Brett Galloway, vice president and general manager, wireless networking business unit at Cisco Systems Inc. "We look forward to continuing our successful relationship solution—selling EFJ offerings with our Unified Wireless Network products."

Commenting on the acquisition, Chih-Hsiang Li, chairman and chief executive officer of 3eTI, said, "This is an exciting time for 3eTI to join with EFJ Inc. The floodgates of secure WLAN business have opened, and the combination of the EFJ and 3eTI teams will allow us to grow at an accelerated pace."

Steven Chen, founder and executive vice president/general manager for wireless products, said, "The recent DOD 8100.2 Commercial WLAN Update requires FIPS 140-2 validation, WPA-2 certification, and IEEE 802.11i compliance. 3eTI is the first company to achieve FIPS 140-2 validation and WPA-2 certification with its mesh WLAN access points. 3eTI has focused on interoperable security solutions based on open standards. This transaction will strengthen 3eTI's commitment to our partners."

EFJ Inc. acquired 3eTI for $36 million. The purchase price includes approximately $5 million to satisfy certain liabilities of 3eTI, and approximately $3.6 million is being held in escrow for potential indemnification claims. Certain 3eTI employees are eligible to participate in bonus programs with payments to be earned based on achievement of performance objectives and continued employment. EFJ Inc. is financing the transaction with $21 million of cash and a $15 million term loan. The $15 million term loan is payable over 4 years and will be effected through an amendment and increase to EFJ's existing line of credit facilities with Bank of America. The merger documents have been signed and delivered, and the closing will be effective upon confirmation of the filing of the articles of merger with the Secretary of State of Maryland.

3eTI was an Intel Capital portfolio company prior to this acquisition. 3e Technologies International Inc. was being represented in this transaction by BB&T Capital Markets/Windsor Group, a division of Scott & Stringfellow Inc.

About 3e Technologies International Inc.
3eTI is a leading provider of FIPS 140-2-validated WLAN products, including security and management servers, mesh networking, and supplicant and WLAN client devices. It offers wireless-enabled solutions for RFID, video surveillance, remote sensors, and location-based context-aware telematics. 3eTI serves government, industrial, and commercial users worldwide. For more information, visit the company's Web site.

About EFJ Inc.
EFJ Inc. is the Irving, Texas-based parent company to industry-leading wireless telecommunications solutions businesses. EFJ Inc. is home to the EFJohnson Company, one of the first developers of Project 25 mobile communications products and solutions, and Transcrypt International, a leader in secure communication solutions. For more information, visit EFJ's Web site.


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