Digimarc Corporation has rejected an unsolicited offer from Safran in favour of its original suitor L-1 Identity Solutions. Consequently Digimarc has signed an amended definitive merger agreement with L-1 Identity Solutions valuing the ID Systems Business of Digimarc at US$310 million, an increase of approximately $50 million over the purchase price provided in the existing merger agreement between the parties.

The revised transaction will be effected through a tender offer, followed by a merger of Digimarc with a wholly-owned subsidiary of L-1.

The Digimarc Board of Directors unanimously approved the new offer from L-1 and is recommending that Digimarc´s stockholders tender into the offer. The company has terminated its discussions with Safran regarding their interest in acquiring the ID Systems business.

According to Bruce Davis, Digimarc Chairman and CEO, Digimarc´s best interests are served by proceeding with L-1 under the terms of the revised agreement. He noted that, "The L-1 proposal provides shareholders with a higher all cash price than indicated by Safran and that the tender offer approach proposed by L-1 should expedite closing of the transaction."

Regarding customer and employee interests Davis said, "L-1 CEO Bob La Penta has a clear and convincing vision of global needs for improved identity management. The combination of our ID Systems Business with L-1 positions L-1 as a world leader in providing identity management solutions, with an unrivalled portfolio of technologies, expertise, experience, and relationships. This comes at a very opportune time as many of our customers are considering significant security upgrades and the US government has awarded tens of millions of dollars of grant monies to improving America´s driver license issuance systems."

Under the terms of the amended merger agreement, the tender offer is expected to commence no later than 7 July 2008 and to remain open for 20 business days. The spin-off of Digimarc´s digital watermarking business will occur prior to the expiration date of the tender offer.