The offer price represents a premium of 57 percent over the closing price of Gemalto stock on 8 December, before Atos made its bid. Atos said it would withdraw its offer, but remains open to a combination with Gemalto if the Thales deal fall through.
Thales said it will combine its digital assets with Gemalto within a new Global Business Unit, to be led by Gemalto CEO Philipps Vallee. Gemalto will continue under its own brand as one of the seven Thales global business units. Altogether, the new business unit will represent about 20 percent of pro forma group revenues and rank among the top three players worldwide, with EUR 3.5 billion revenues in the fast growing digital security market.
The deal is expected to generate mid to high teens adjusted earnings per share accretion, pre synergies, as of the first year after close. Return on capital employed (including synergies) will go higher than the Thales cost of capital within three years after completion. Run-rate pre-tax cost synergies are expected at EUR 100-150 million by 2024, as well as “meaningful” revenue synergies.
Thales has over the past three years invested over EUR 1 billion in digital technologies, namely connectivity, cybersecurity, data analytics and artificial intelligence, in particular with the acquisition of Sysgo, Vormetric and Guavus. The integration of Gemalto will strongly accelerate this focus, reinforcing Thales's digital offering, across its five vertical markets (aeronautics, space, ground transportation, defence and security).
Thales specified that the addition will create a unique portfolio in an IoT, mobile and cloud world and create a global leader in digital security and cybersecurity. The solution portfolio will include security software, expertise in biometrics and multifactor authentication and the issuance of secure digital and physical credentials. The company believes these technologies will yield significant commercial opportunities and revenue synergies in the years ahead.
The companyles will finance the offer through its available cash resources and with new debt arrangements. In connection with the deal, Thales has secured a EUR 4.0 billion fully committed credit agreement. After completion, Thales will keep its dividend policy unchanged. The deal is expected to close in the second half, after clearing necessary regulatory approvals and clearances.
The combined company will have more than 28,000 engineers, 3,000 researchers, and invest more than EUR 1 billion in self-funded R&D. Thales does not expect to reduce any of Gemalto’s workforce and has committed to preserving employment in Gemalto's French activities until at least the end of 2019.
