Thales agrees to buy Gemalto in digital security deal worth ~$5.43BN

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Shares in defense group Thales (PA:) rose on Monday after chipmaker Gemalto (AS:) accepted the French company's 4.8 billion euro ($5.66 billion) takeover bid to create a leader in digital security.

Defense and aeropsace company Thales will pay 51 euros in cash for each Gemalto share, representing a 57% premium over Gemalto's closing price on December 8, according to the statement.

Thales has agreed to buy Gemalto for a price of Euro 51 per share, higher than the offer by Atos of Euro 46 per share, which Gemalto rejected last week. I would like to personally thank Gemalto's management and Board of Directors for their unanimous support and I welcome warmly Gemalto's 15,000 employees to our Group.

Gemalto is a digital security firm that produces SIM cards and Near Field Communications technology for mobile phones. 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 intends to combine its digital businesses into Gemalto which will continue to operate under its own brand, with Vallée leading the combined unit - and as one of the seven Thales global business units.

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Patrice Caine, Thales chairman and chief executive, said: "The acquisition of Gemalto marks a key milestone in the implementation of Thales's strategy".

Financial Times says the combined business will generate €3.5 billion in sales, and should rank among the top three players worldwide in the digital security market. Return on capital employed (including synergies) will go higher than the Thales cost of capital within three years after completion. It also sells identity and access control solutions to the public sector, including biometric authentication technologies for government-issued ID documents such as passports.

Atos said it would no longer pursue a deal with Gemalto but would remain available for talks if the Thales bid doesn't come to fruition. Philippe Vallée will lead the combined digital security business.

The companies expect to complete the acquisition, which is subject to shareholder and regulatory approval, in the second half of 2018.

The combined company will have more than 28,000 engineers, 3,000 researchers, and invest more than Euro 1 billion in self-funded R&D.

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