Thales to Buy Security Tech Firm Gemalto for $5.7 Billion

　　Thales, one of Europe’s key companies in aerospace, transport and defense, has announced it is to acquire Gemalto, a provider of digital identity and authentication systems, for €4.8bn (about $5.66 billion) in cash.  Gemalto previously rejected a €4.3bn offer from rival French firm Atos.

　　Thales says the acquisition of Gemalto’s digital security portfolio puts it in position to offer an end-to-end solution to secure the full critical digital decision chain in IoT, mobile and the cloud — from data creation in sensors to real-time decision making. The technology portfolio will help in its offer for enterprises and governments with a seamless response to data security challenges that are likely to become more common as they execute their digital transformation strategies.

　　The acquisition adds more than €3bn ($3.5 billion) in revenue to Thales’s digital business sales and includes a set of technologies and competencies that have applications in all of its five vertical markets. Its solution portfolio will include security software, expertise in biometrics and multifactor authentication and the issuance of secure digital and physical credentials. These technologies, which combine diverse and constantly evolving use cases, are expected to yield significant commercial opportunities and revenue synergies in the years ahead, the company said.

　　The combined capability aims to address the needs of all operators of critical infrastructures including banks, telcos, governments, utilities and general industries.

　　Thales will combine its digital businesses into Gemalto, which will continue to operate under its own brand as one of the seven Thales global business units. Philippe Vallée, Gemalto’s chief executive officer, will lead the combined digital security business.

　　The acquisition follows a troubled year for Gemalto, which has issued a series of profit warnings that hurt its shares and overshadowed its attempt to shift away from a slowing market for phone SIM cards toward security services such as data encryption and biometric passports.

　　"Together with Gemalto’s management, we have big ambitions based on a shared vision of the digital transformation of our industries and customers," said Patrice Caine, Thales’s chairman and CEO, in a press statement.

　　"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," Vallée added. "We share the same values and Gemalto will be able to pursue its strategy, accelerate its development and deliver its digital security vision, as part of Thales.”

　　The transaction is expected to close in the second half of 2018, after Thales has secured all regulatory approvals and clearances.  The combined group will have more than 28,000 engineers and 3,000 researchers and will invest more than €1bn (about $1.18 billion) in R&D.