French aerospace and defense giant Thales agreed to buy Dutch-French chipmaker Gemalto for €4.8 billion to create a “global market leader in the fast-growing digital security market.”
Thales’ recommended all-cash offer of €51 per share cum dividend represents a premium of 57% on the closing price of Gemalto shares on December 8 — and trumps an earlier €4.3bn takeover proposal for Gemalto by French firm Atos.
Thales and Gemalto can terminate the deal if another offer is made that exceeds the Thales bid by at least 9% — but Gemalto “shall give Thales the opportunity to match such offer.”
The French state is a major shareholder in Thales and Gemalto.
Thales said digital security specialist Gemalto had 2016 annual revenues of €3.1 billion and has customers in 180 countries.
Gemalto has been trying to move from the slowing market for phone SIM cards towards security services such as data encryption and biometric passports.
Thales CEO Patrice Caine said: “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.”
Gemalto 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.
“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 said that over the past three years it has increased its focus on digital technologies, investing more than €1 billion in connectivity, cybersecurity, data analytics and artificial intelligence, in particular with the acquisition of Sysgo, Vormetric and Guavus.
“The integration of Gemalto strongly accelerates this strategy, reinforcing Thales’s digital offering, across its five vertical markets — aeronautics, space, ground transportation, defence and security,” said Thales.
“Altogether, this new business unit will represent c. 20% of pro forma group revenues and rank among the top three players worldwide, with €3.5 billion revenues in the fast growing digital security market.”