SCM Microsystems, fast growing global provider of smart card-based logical access readers, and Hirsch Electronics Corp., a recognized leader in IP-based physical security solutions have entered into a definitive agreement to merge.

Pursuant to the proposed amalgamation, the security holders of Hirsch will get 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.

According to company officials, the combination of German-based 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.

The companies believe that, two firms 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 speed up growth into new markets.

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

However, SCM and Hirsch products will continue to be marketed under their respective brand names.

Post-merger, Mr. 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.