Thales agrees to buy Gemalto in digital security deal worth ~$5.43BN

Digital security solutions provider Gemalto has agreed to a €51 per share acquisition offer from French aerospace and defense group Thales — in a deal worth around $5.43BN.

The unanimously board approved all-cash offer represents a premium of 57% over the closing price of Gemalto stock as of 8 December 2017.

In a statement today recommending Thales’ offer, CEO Philippe Vallée said: “I am convinced that the combination with Thales is the best and the most promising option for Gemalto and the most positive outcome for our company, employees, clients, shareholders and other stakeholders,” adding that it would enable Gemalto to “accelerate its development and deliver its digital security vision”.

Last week the Gemalto board rejected a €46 per share offer from French IT services company Atos, saying it significantly undervalued the company.

Gemalto is a major producer of SIM cards and NFC for mobile phones but also provides secure transaction solutions to banks, including EMV chip cards, payment terminals and user authentication systems for online banking, such as one-time token generating hardware devices for 2FA. It also sells identity and access control solutions to the public sector, including biometric authentication technologies for government-issued ID documents such as passports.

Another branch of its business is in enterprise security, including encryption and cloud security services. It also plays in the Internet of Things space — offering connectivity, security and monetization services.

The Thales Group, which focuses on aerospace, defense, space and transportation, also operates a security division offering solutions in areas such as critical information system operations, airport security systems and cryptology and security architectures for big data. This is where it’s intending Gemalto to slot in.

Patrice Caine, Thales’s chairman and CEO, said the pair’s aim is to create a global leader in digital security.

“The acquisition of Gemalto marks a key milestone in the implementation of Thales’s strategy,” he said in a statement. “Together with Gemalto’s management, we have big ambitions based on a shared vision of the digital transformation of our industries and customers. Our project will be beneficial to innovation and employment, whilst respecting sovereign strategic technologies.”

Over the past three years, Thales says it has ramped up its focus on digital technologies — noting it has invested more than €1BN in connectivity, cybersecurity, data analytics and artificial intelligence (including acquiring Sysgo, Vormetric and Guavus).

It adds that the integration of Gemalto “strongly accelerates” this strategy, reinforcing its digital offering across its five vertical markets.

Specifically it’s eyeing adding Gemalto’s more than €3BN of revenue to its digital business sales and bagging a set of relevant “technologies and competencies” for the vertical markets where it plays.

Thales intends to combine its digital businesses into Gemalto which will continue to operate under its own brand, with Vallée leading the combined unit — and as one of the seven Thales global business units.

The combined Group will have more than 28,000 engineers, 3,000 researchers, and will invest more than €1BN in self-funded R&D, it said.

Thales added that it does not anticipate any reduction in Gemalto’s workforce as a consequence of the transaction.

The transaction is dependent on shareholder and regulatory approvals and clearances — with closure slated for the second half of 2018.

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