Thales outbids Atos for Gemalto

French aerospace specialist Thales outbid Atos for Dutch cybersecurity provider Gemalto. The company has agreed to purchase Gemalto for $5.6 billion, surpassing Atos’s bid valued at $5.06 billion.

Gemalto is considered the world’s largest manufacturer of SIM cards and credit cards. Thales, by contrast, is known as an electrical systems service provider for the aerospace industry, with increased focus on cybersecurity and artificial intelligence over the past three years.

Thales outbidding Atos for Gemalto was somewhat unexpected. Both companies were attracted to Gemalto’s security products, which helps safeguard businesses and governments from data breaches and identity theft.

The companies said the acquisition would help form a global market leader in digital security. Thales intends to integrate Gemalto into its existing digital business unit, which develops products related to cybersecurity, artificial intelligence and data analytics.

“The acquisition of Gemalto marks a key milestone in the implementation of Thales’s strategy,” said Patrice Caine, Thales’s chairman and chief executive officer, in a statement. “Together with Gemalto’s management, we have big ambitions based on a shared vision of the digital transformation of our industries and customers.”

Under the terms of the agreement, the deal can be modified or terminated if an offer of 9% or higher than the agreed amount is put forward. With the news of Thales’s proposal, Atos has withdrawn interest.

“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,” said Philippe Vallée, Gemalto’s CEO. “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.”

Bloomberg reports the acquisition marks the biggest technology deal in Europe this year. Thales said it did not expect to cut Gemalto’s workforce due to the acquisition. The proposal will proceed to regulators for approval. The deal is expected to close in the second half of next year.

“The Board of Directors, after full and careful review, together with its financial and legal advisors, of the various options available to the Company, has established unanimously that the Thales offer is in the best interests of Gemalto and all its stakeholders,” said Alex Mandl, chairman of Gemalto’s board of directors. “As a result, the Gemalto Board of Directors unanimously recommends the Thales offer to its shareholders.”

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