It’s been a busy fourth quarter for the executive team at Smartrac. After making a pair of acquisitions earlier this month, Smartrac announced today that it is acquiring UPM’s RFID business. The deal is expected to close during the first quarter of 2012 and will provide Smartrac with a much stronger presence in the burgeoning retail RFID market.

As part of the deal, UPM will become an indirect shareholder of Smartrac with a 10.6 percent economic interest in the company.

Registered in the Netherlands, Smartrac is one of the global market leaders in RFID inlays for electronic passports and contactless credit cards, as well as for RFID transponders for public transport applications. The company has continuously expanded its production capacity at the site in Malaysia over the past three years to satisfy the strong growing demand for UHF RFID tags and inlays in the retail apparel and smart media management markets as well as in further attractive RFID application fields.

The UPM RFID deal will provide Smartrac with even greater production capability, as well as entry into markets like retail where UPM has an established presence.

“Over the last year or two we’ve seen Smartrac develop some speciality tags and get more involved in the UHF space, but they really didn’t have much of a sweet spot in retail,” says Mike Liard, head of the RFID practice at VDC Research. “UPM is more than just retail focused, but what they are doing in retail will certainly augment what Smartrac is doing in that space.”

Liard expects the deal to complement Smartrac’s industrial application business. Both companies have a strong presence in the industrial sector, and bringing together that marketplace will make for a stronger single entity.

In ABI Research’s 2011 vendor matrix for passive ultra-high frequency (UHF) RFID label inlays, UPM RFID was ranked number one for innovation and implementation among UHF inlay business companies.

UPM RFID has been actively engaged in numerous industry-sponsored trials and research projects, which has enabled the company to gain an extensive UPM RFID designed footprint in various segments.

“UPM RFID is a true pioneer in the global RFID tags and inlay business,” said Dr. Christian Fischer, CEO of Smartrac. “We are delighted to add such an experienced and capable crew to our global team.

“The transaction will provide us with a strong product offering for NFC and UHF RFID tags and inlays and will furnish us with favorable additional manufacturing capacities in strategically important markets. The combination of Smartrac and UPM RFID will significantly accelerate our momentum as a developer and supplier of passive RFID tags and inlays for all relevant application fields of today and tomorrow.”

Earlier this month Smartrac announced it is becoming the majority owner of U.S.-based Neology, a leader in the EVR and toll collection market. Smartrac also signed an agreement to acquire KSW Microtec AG.