It has been a great week for the French defense electronics maker, Thales (TCFP.PA), whose shares soared more than 8 percent on Monday after chipmaker Gemalto (GTO.AS) accepted its $5.7 billion takeover bid.
The bid comes less than a week after a smaller bid by Atos, whichGemalto rejected, claiming it “significantly” underrated the company. Thales acknowledged common support for its offer from Gemalto’s board, as this offer is 11 percent more than the biggest bid yet for Thales CEO Patrice Caine since he took over three years ago. Atos replied that they will no longer seek after Gemalto, but will look for another opportunity if the Thales offer isn’t completed.
However, as a result, Thales’ shares soared up 8.25 percent at 93.40 euros, though Amsterdam-listed Gemalto’s shares 5.6 percent higher at 49.47 euros, below Thales’ 51 euro per share offer.
Furthermore, these acquisitions reveal that both companies are competing for a share of the fast-growing digital security market, as companies hunt for more online security.
“In terms of DNA, the two companies look much more alike,” cited Richard-Maxime Beaudoux, an analyst at Bryan, Garnier & Co. “It’s not a financial deal, which was the case for Atos. They gave it a try; it was opportunistic.”
However, this acquisition comes at a great time for Thales, because their shares were not in a profitable path. They are trying to change the path of slow market for phone SIM cards toward security services like data encryption and biometric passports.
“Our intention is to keep all of the assets in Gemalto’s portfolio,” Caine said, telling that SIM card operations persisted together with Gemalto’s budding effort on cybersecurity.
Thales also predicted that Gemalto’s revenues will grow up to 5 percent per annum and alleged it probable Gemalto’s EBIT margin to surpass its own within two or three years of the merger.
On Monday, Vallee mentioned that “he would stick to a plan to cut 288 jobs in Gemalto’s struggling SIM card business in France. This plan is maintained,” he told BFM business radio, adding that he will also attempt to reorganize staff internally.