Digital security company, Gemalto has accepted a $5.6 billion takeover bid from France-based Aerospace and defense group Thales, rejecting an earlier bid by fellow French firm Atos.
The French state is the largest shareholder in Thales, while state-owned bank Bpifrance is Gemalto’s second-biggest shareholder.
Thales CEO Patrice Caine told reporters on Sunday: “His firm’s bid represented $6.6 billion including 800 million of debt in addition to its offer for shares.”
This showed its basic €51 per share offer for Gemalto was worth €4.8 billion in comparison with Atos’ €4.3 billion bid based on €46 per share price.
Atos, which saw its offer rejected by Gemalto this week, said in a statement that it would not pursue its bid, though it would be open to talks with Gemalto if Thales’ offer fell through.
Thales and Gemalto said in an earlier statement that Thales’ all-cash bid has the unanimous backing of the both companies’ boards.
Thales’ digital activities will be merged with Gemalto to create a business with €3.5 billion euros in sales which would be a top-three global player in digital security. The combined Group will have more than 28,000 engineers, 3,000 researchers, and invests more than €1 billion in R&D.
Thales and Gemalto said their digital security entity would generate pre-tax cost synergies of between 100 million and 150 million euros by 2021, as well as meaningful revenue synergies.
The deal, expected to close in the second half of 2018, would have a positive effect on earnings per share of 15-20 percent, before synergies, from the first year. Thales estimates that the combination will generate run-rate pre-tax cost synergies of €100 million to €150 million by 2021, as well as meaningful revenue synergies.
Thales did not expect job losses from the takeover and will maintain current job levels at Gemalto’s French operations until at least the end of 2019. In fact, Thales recruited 6,000 people globally in 2017.
Brice Barrier, representative for UNSA, the largest union at Gemalto, said he would call on Gemalto to drop a plan to cut 288 jobs in France.
Thales has increased its focus on digital technologies over the past three years, investing over €1 billion in connectivity, cybersecurity, data analytics and artificial intelligence, in particular with the acquisition of Sysgo, Vormetric and Guavus.
Thales adds over €3 billion of revenue to its digital business sales and acquires a set of technologies and competencies that have applications in all of Thales’s five vertical markets.