AEP said in a statement that, following the acquisition, it would have a 15 per cent share of the global hardware e-security market. The private group, which was founded in 1998, hopes to become the top supplier in the sector.

Baltimore Technologies has offloaded its hardware division to Dublin-based AEP Systems for £4 million sterling (€6.3 million). The latest divestment strips the troubled company down to its core security software business.

The disposal brings to more than €50 million the value of assets sold under its restructuring programme. AEP Systems will pay £3 million up front with the balance payable depending on warranties and product sales until the end of 2004.

The operations sold made a pre-tax profit last year of £300,000 and had net assets of £2.2 million. No sales figures were available. AEP expects the move to double its turnover next year.

The division's 30 staff will move to AEP, which has just completed an €8 million fundraising and already employs 50 people.

Baltimore will act as a distributor for its former products worldwide.

AEP, which has raised €17 million this year, said it was confident the acquisition would boost its fortunes despite the downturn in the technology sector. "Security is the one thing that remains important to everyone in the industry," said a spokeswoman for AEP.

"It is a good place for us to be," she added.

Baltimore chief executive Mr Bijan Kherzi said the move would enable the company to reinforce its focus on software for high-end authentication, authorisation and digital signing systems in finance, government and wireless.

"We look forward to a strong partnership," he said.