Aerospace giant Thales agrees Gemalto takeover, trumps Atos offer

Reuters News
Posted: Dec 17, 2017 3:58 AM

PARIS (Reuters) - Aerospace and defense technology group Thales has agreed to buy chipmaker Gemalto in an all-cash offer, promising to create a "world leader in digital security" and trumping an earlier takeover bid by tech firm Atos.

The 51 euro per share offer, backed by the boards of both companies, represents a 57 percent premium over Gemalto's closing price as of Dec. 8, Thales and Gemalto said in a joint statement on Sunday.

Atos saw its 46 euro per share offer rejected by Gemalto this week but said it would pursue its bid.

Atos declined to comment on the deal between Thales and Gemalto.

Thales CEO Patrice Caine later told Reuters the company would spend 5.6 billion euros ($6.6 billion) on Gemalto, including 800 million of debt.

This showed its basic offer for Gemalto shares was worth 4.8 billion euros in comparison with Atos' 4.3 billion bid.

Thales and Gemalto said their tie-up would create a top-three global player in digital security with 3.5 billion euros in sales.

"Combined with Gemalto's unique leading digital security portfolio, Thales will be ideally positioned to offer an end-to-end solution, to secure the full critical digital decision chains, from data creation in sensors to real-time decision making," they said in the statement.

Thales will be able to finance the offer through its available cash resources and a 4.0 billion euro fully committed credit arrangement secured for the Gemalto offer, it said.

The takeover offers from Atos and Thales have come after a difficult year for Franco-Dutch Gemalto during which its share price fell sharply following a string of profit warnings.

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, according to the statement.

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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, they said.

Thales did not expect job losses from the takeover and pledged to maintain current job levels at Gemalto's French operations until at least the end of 2019.

The companies could cancel the deal if Gemalto received another offer deemed to be more beneficial and worth at least 9 percent more than Thales', but Thales would have the opportunity to match the counter-offer, they said.

(Reporting by Cyril Altmeyer and Gus Trompiz, Editing by Gareth Jones)