So why is ASG interested in Mitek? Mitek is a provider of mobile capture and identity verification software. Its identity verification product, Mobile Verify, is used to help banks verify who they are conducting business with. Mobile Verify is built into a bank's app to perform algorithmic-based tests that verify the authenticity of ID documents, including passports, driver's licenses, and identity cards from nearly every nation.
Products include Mobile Deposit (for retail banking) to allow customers to remotely deposit checks using their camera-equipped smartphone. While consumers love the convenience of Mobile Deposit, Mitek says financial institutions love it even more as it's 1/10th of the cost of processing a check inside a branch and it's a driver of higher customer loyalty. While its technology is primarily used by banks, it's also seeing adoption by telecom, healthcare, travel, retail, sharing economy companies etc.
Its Mobile Fill product enables the camera to serve as a keyboard. Consumers can pre-fill forms with personal data by simply snapping a picture of their driver license or credit card. Mobile Docs allows consumers to scan and send document images for a loan.
You may wonder why MITK is trading well below the $11.50 offering price. It’s because the deal may not happen because MITK's board does not seem too interested in making a deal. We will see how MITK responds to the higher offer but they made it clear that the $10 offer significantly undervalued the company. The $11.50 offer seems to still be of little interest to the board. ASG says that Mitek's board is refusing to engage in discussions.
In its Q4 (Sep) earnings report in early November, MITK sounds upbeat about its technology. It's seeing continued adoption for its Mobile Verify ID verification platform. MITK is also experiencing solid growth in Mobile Deposit. In fact, MITK said it continues to dominate the mobile check deposit market with its industry leading platform.
With Mobile Verify, Mitek feels it has a unique opportunity to be a game-changer when it comes to enabling digital commerce. Mitek believes digital transformation initiatives are in their infancy driven by increasing demand for mobile functionality and convenience. As such, the company seems pretty confident in its growth prospects and does not seem too eager to get acquired.
In sum, this will be an interesting stock to watch in the coming months. Will ASG initiate a hostile takeover? Will another suitor come in a make a higher bid? This technology sounds promising and it's easy to see why it'd be an attractive platform that could be folded into a larger platform. The board’s disinterest in engaging in talks could change if the price is right.