Gemalto: Atos prepared to deal with any ‘white knight’ defence
14 DEC 2017
Gemalto considering range of defense options
Ingenico denies prospect of making rival bid
Price negotiation seen as most viable option
Atos [EPA:ATO] is “prepared” to deal with any rival bid for Gemalto [AMS:GTO], a spokesperson for the company said.
Gemalto is considering a range of ways to defend itself against the unsolicited approach from Atos, a source close to the target said. It rejected Atos’s EUR 46 per share offer yesterday, 13 December, expressing concerns about valuation, deal certainty and the nature of the approach. Atos responded by saying it would pursue the deal.
Gemalto sees the proposal from Atos as very opportunistic, coming at a time when Gemalto’s share price is at a low point, the source said. The offer from Atos does not reflect the upside potential in the Gemalto stock, the source added.
One of Gemalto’s defence options is to solicit a white knight bidder, two bankers and lawyer following the deal said.
Both bankers and the lawyer pointed to Ingenico [EPA:ING] as a potential white knight. A tie-up between the two has often been speculated, but any company in payment-systems technology and fibre security will be eyeing the asset, the first banker said.
A spokesperson for Ingenico categorically denied the prospect of it making a rival bid for Gemalto.
Advent-backed Oberthur or another private equity group could step in, but may find it difficult to formulate a counter offer in the next month or so, the second banker said. There are parts of Gemalto that private equity would not find attractive as it has some non-growth assets, he said.
The approach from Atos is not ‘friendly’ as its statements to the press suggest, the first banker and a person briefed said. The offer, as well as being opportunistic, was made months before Gemalto’s investor day in March, the banker noted. This means Gemalto has not had a chance to convince shareholders of its stand-alone strategy, the banker said.
Gemalto yesterday said its transition from traditional banking and smartcard markets to government enterprise & cybersecurity and machine-to-machine markets “is yet to be reflected in the company’s share price as its strategy and positioning around these growth segments will be detailed during the forthcoming Capital Markets Day”.
The main issue for Gemalto is price, the source close said. But, Gemalto is not best placed to negotiate a higher offer from Atos after successive profit warnings, the lawyer said. It could try pressuring Atos to raise its bid by dragging out the negotiations by demanding certain conditions such as job commitments, the lawyer said.
Gemalto shareholders are open to a deal due to the company's performance and hit on its share price, the second banker added. Atos could well succeed without raising its price, he said.
But, negotiating a higher price was Gemalto's most realistic option versus a white knight or pushing its standalone strategy, this banker agreed.
Bpifrance Participations, the state-controlled investment bank, which has a 8.23% stake in Gemalto, is looking at the tie-up favourably, a spokesperson told this news service on Tuesday.
Gemalto declined to comment.