Thales Bids €4.76bn For Gemalto In Year’s Biggest Euro Tech Deal

Gemalto’s board of directors has backed a €4.76 billion (£4.2bn) cash buyout offer from French aerospace firm Thales, a week after a previous bid for the Dutch security technology company by outsourcing giant Atos met with a lukewarm response.

Gemalto’s shares have dropped this year amidst a series of profit warnings, and the Amsterdam-based company last week described Atos’ €4.3bn offer as “opportunistic” and representing a significant undervaluation at a time when Gemalto had “stabilised its performance”.

Gemalto is best known as a maker of chips for SIM and bank cards and has more recently shifted its focus to software, but has faced challenges over the past year and a half, apparently having overestimated the speed at which customers would adopt new technologies.

The bid from Atos, which is based in the Paris suburb of Bezons, valued Gemalto’s shares at €46, compared with €51 per share from Thales, which makes avionics equipment and is the world leader in air-traffic management.

Security in focus

Gemalto has been in talks with Thales for several month, Gemalto chief executive Philippe Vallée said in an interview on local radio on Monday.

The acquisition by Thales would be Europe’s biggest technology deal this year, underscoring the demand for security expertise as large organisations are affected by increasingly damaging data breaches. Gemalto makes products that help shield public- and private-sector organisations from data and identity theft.

Atos said it would no longer pursue a deal with Gemalto but would remain available for talks if the Thales bid doesn’t come to fruition.

Thales said it doesn’t plan to reduce Gemalto’s workforce and expects to see as much as 150 million euros in savings through synergies by 2021. Gemalto is to operate under its own brand as one of Thales’ seven global business units and its roughly €3.5bn in revenues represents about 20 percent of Thales’ total sales.

Thales is backed by the French government, which holds about 25 percent of its shares, and which is also the largest single investor in Gemalto.

The companies expect to complete the acquisition, which is subject to shareholder and regulatory approval, in the second half of 2018.

In a conference call on Monday Vallée said he does not foresee major anti-trust issues in Europe or the US.

“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,” Vallée said in a statement.

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