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Aerospace and defence group Thales has agreed to buy chipmaker Gemalto for €4.8 billion($5.6 billion), trumping an earlier bid by fellow French firm Atos to take aim at a fast-growing digital security market.
The bidding contest for Gemalto has come after a difficult year for the Franco-Dutch group in which, profit warnings have hurt its share price and overshadowed its attempt to shift from a slowing market for phone SIM cards towards security services such as data encryption and biometric passports. “This is a terrific project,” Thales CEO Patrice Caine told reporters on Sunday. “In digital, Gemalto and Thales are like twins.” Caine said his firm’s bid represented a total of €5.6 billion ($6.6 billion), including €800 million of debt in addition to its offer for shares.
This showed its basic €51 per share offer for Gemalto was worth €4.8 billion in comparison with Atos’ €4.3 billion bid, based on a €46.
Atos offer
Atos saw its offer rejected by Gemalto this week, but said it will pursue its bid. The company declined to comment on the deal. Thales’ all-cash bid has the unanimous backing of the both companies’ boards, Thales and Gemalto said in an earlier statement.
The agreement calls for Thales’ digital activities to be merged with Gemalto to create a business with €3.5 billion in sales and, which will be a top-3 global player in digital security, they said.
Christophe Castaner, a junior minister in the French government and head of the party of President Emmanuel Macron, told France 3 television the deal was “in the right direction”.
The French state is the largest shareholder in Thales, while state-owned bank Bpifrance is Gemalto’s second-biggest shareholder.
Thales and Gemalto said their digital security entity would generate pre-tax cost synergies of €100-150 million by 2021, as well as meaningful revenue synergies.
Jobs
Thales did not expect job losses from the takeover and pledged to maintain current job levels at Gemalto’s French operations until at least the end of 2019.
The deal, expected to close in the second half of 2018, will have a positive effect on earnings per share of 15-20 per cent, before synergies, from the first year, they said.
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