Monday , December 10, 2018

After Rebuffing Atos, Gemalto Accepts $5.7 Billion Buyout Offer From Thales

Paris-based defense, aerospace, and transportation contractor Thales S.A. announced Monday that it has a €4.8 billion ($5.66 billion) deal to acquire Gemalto N.V., the world’s largest maker of chips for smart cards and mobile phones.

The announcement that Thales plans to buy Gemalto for €51 per share ($60.1) comes just days after Gemalto, which has headquarters in Amsterdam and France, rejected a buyout offer from French technology firm Atos, which had bid €46 ($54.3) per share. Gemalto said the Atos bid undervalued its businesses, which besides chips include data-security products, according to European press reports.

Gemalto’s board is recommending that company shareholders approve the Thales bid. Thales said in a news release that its all-cash offer represents a 57% premium over Gemalto’s Dec. 8 closing share price. The deal values Gemalto at nearly $5.7 billion, according to Reuters.

Thales is looking to expand its presence in digital security with the acquisition. Gemalto’s SIM card business for mobile phones has slowed down, as has its U.S. EMV chip card business now that most American credit and debit cards have converted from the old magnetic-stripe technology. But the company, which had €3.1 billion ($3.43 billion) in revenues in 2016, offers software, biometrics, and encryption products. It claims customers in 180-plus countries and has 15,000 employees.

Thales, which had revenues of €14.9 billion ($16.5 billion) last year, said in the release that “Gemalto is well advanced in its transition from its historical markets” to fast-growing government, enterprise-security, and industrial Internet of Things markets.

“Together with Gemalto’s management, we have big ambitions based on a shared vision of the digital transformation of our industries and customers,” Thales chairman and chief executive Patrice Caine said in a statement. “By combining our talents, Thales and Gemalto are creating a global leader in digital security.”

Gemalto CEO Philippe Vallée said in the release that “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. We share the same values and Gemalto will be able to pursue its strategy, accelerate its development, and deliver its digital-security vision, as part of Thales.”

Thales and Gemalto said they expect the deal to close in 2018’s second half. Their agreement gives Thales the opportunity to match a superior offer for Gemalto should one come along.

Thales once was a player in the point-of-sale terminal market, especially in Europe, but sold that business in 2008 to the former Hypercom Corp.

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