Gemalto accepts Thales €4.8bn cash offer
All-French deal follows rejection of bid by Atos for struggling digital company
France’s Thales has agreed to buy struggling digital company Gemalto in a deal worth close to €4.8bn.
The agreement comes just days after Gemalto had rejected a €4.3bn takeover proposal by larger rival Atos, which the French company had called “opportunistic”.
“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,” said Philippe Vallée, Gemalto’s chief executive.
Patrice Caine, Thales chairman and chief executive, said: “The acquisition of Gemalto marks a key milestone in the implementation of Thales’s strategy.”
Aerospace and defence group Thales made a €51 per share cum dividend all-cash offer for Gemalto, representing a 57 per cent premium over the closing price on December 8. Thales and Gemalto may terminate the agreement if another offer is made that exceeds the Thales bid by at least 9 per cent.
In a blow to Atos chief executive Thierry Breton, the offer was unanimously recommended by the boards of both companies. Mr Breton, a former finance minister, had claimed that the French state, which holds 8 per cent in Gemalto, supported Atos’s offer.
Thales will combine its digital businesses into Gemalto, which will continue to operate under its own brand, according to the statement. Mr Vallée will continue to lead the combined digital security business.
The combined business will generate €3.5bn of sales and rank among the top three players worldwide in the digital security market, said the companies.
Thales has also committed to preserving employment in Gemalto’s French activities until at least the end of 2019, according to the statement on Sunday morning.
The French state, which is a large shareholder in both Thales and Gemalto, had said it would be closely monitoring the situation at Gemalto in the face of the bid from Atos.
“The first thing is that jobs in the sector are kept in France . . . the second thing we must watch is investment and innovation,” said Bruno Le Maire, French finance minister, in parliament on Wednesday.
Atos had proposed a “friendly” deal with Gemalto on November 28 in an all-cash offer of €46 a share.
Gemalto rejected the offer from Atos on Wednesday, saying it was “not friendly and collaborative”, significantly undervalued the company and failed to provide a compelling strategy compared with Gemalto’s standalone prospects.
Atos declined to comment. However, in light of Mr Breton up to now stressing his desire to do a “friendly deal”, one person following the situation closely considered it was unlikely that Atos would enter into a hostile bidding
Gemalto, which relies on Sim cards for about a third of its revenues, has floundered in the face of slowing demand for new phones around the world.
In July, Gemalto said operating profits would be between €200m and €230m in the second half of the year, or a third lower than its previous guidance. It also revealed a €420m writedown because of “deteriorated prospects” in the market. It was the group’s third profit warning in six months.
Thales estimates that the deal will generate pre-tax cost synergies of €100m-€150m by 2021, as well as meaningful revenue synergies.
The deal is expected to close in the second half of 2018. Thales was advised by Lazard, Messier Maris & Associés and Société Générale. Gemalto was advised by Deutsche Bank and JPMorgan.