France's Safran has completed a $1 billion purchase of U.S. face-recognition software maker L-1 Identity Solutions and said it was now the world leader in biometric identification.

The French aerospace and defense company said on Tuesday that L-1, whose products are used by border security agencies and by financial institutions, would join Safran's existing Morpho security business and would be renamed Morpho Trust.

The deal, first announced in September, values L-1 at $12 a share, which was exactly its closing price on Monday. Its completion follows a probe by a U.S. panel responsible for vetting foreign takeovers of firms in sensitive industries.

Shares in Safran were down 1.3 percent at 28.92 euros on Tuesday morning.

Connecticut-based L-1 generated sales of more than $450 million in 2010, and its results will be included in Safran's from July 26, Safran said in a statement.

L-1 is the latest in a string of mid-tier security and defense companies that have been snapped up by traditional arms suppliers.

As top contractors face tumbling defense budgets, they are looking to acquire smaller companies with niche technologies in cybersecurity, civil security, surveillance and intelligence -- a deliberate shift in focus from bombs to bytes.

Under the deal, Safran paid $1.09 billion in cash for L-1 and its core biometrics business. L-1's government consultancy business was acquired by Britain's BAE Systems .

The use of biometrics, allowing machines to identify people through physical characteristics unique to each individual, is spreading quickly as security fears escalate, despite growing privacy concerns slowing their adoption in some markets.

(Reporting by Tim Hepher; Editing by Will Waterman)

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