France-based Paragon ID has purchased Germany-based company Security Label, a designer and manufacturer of baggage labelling tags for the aviation industry.

The financial terms of the transaction were not shared.

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The deal will see Paragon ID acquiring 93% of Security Label’s capital, effective 1 July 2021.

Security Label CEO Montassar Ben Hmida has the remaining stake in the firm. Paragon ID will purchase this stake at a consideration, which will be based on the performance of Security Label over the coming years.

Paragon ID will pay for the deal in cash, using its own cash reserves and available credit lines.

In a statement, Paragon ID said: “The acquisition of Security Label represents an opportunity for Paragon ID to become the world leader in baggage tags for the aviation sector.”

Security Label has collaborated with more than 400 airlines and airports in over 100 nations.

With an estimated market share of 70% in EMEA, the company is a strategic partner of the International Air Transport Association (IATA).

Due to the Covid-19 pandemic, Security Label experienced a drop in its revenue.

The company is anticipating an increase in its income as travel curbs are being eased.

Currently, IATA is backing the global deployment of baggage tracking utilising radio frequency identification (RFID) technology.

Several carriers have already started shifting to RFID technology while many are planning to transition to this technology in the upcoming years.

The acquisition will result in the consolidation of Security Label’s relationships with several international airlines and Paragon ID’s RFID know-how.

They will work together to facilitate the development of RFID baggage tags for the aviation sector.

In 2019, Paragon ID secured an exclusive contract from Air France for the delivery of RFID baggage tags.