Thales Acquires Gemalto for $5.6B to Create Global Security Giant

Days after rejecting an offer from rival firm Atos, Gemalto accepts an acquisition offer from Thales that will help extend digital identity and data security technology.

Thales Gemalto

Thales announced on Dec. 17 that it will acquire digital security vendor Gemalto in a deal valued at 4.8 billion euros, or $5.6 billion.

Gemalto was pursued by French firm Atos, which announced its intention to acquire Gemalto on Dec. 13. Atos offered 46 euros per Gemalto share, while Thales is offering 51 euros per Gemalto share. While the Atos offer was rejected, Gemalto's board of directors unanimously approved Thales’ offer.

"Over the past 12 months we have been investigating internally the merits of the combination with Gemalto, recently reaching the conclusion that there was a real opportunity to build a combination that would be attractive for both stakeholders," Patrice Caine, chairman and CEO of Thales, said in a conference call with financial analysts and the press.

Thales’ bid is a friendly offer, with the goal of further developing Gemalto within Thales, Caine said. Gemalto helps to enable trust in the digital world and is a global specialist in authentication systems and data protection, he added.

"From our point of view, Gemalto serves two broad applications, the security of identities and the security of connected data and objects," Caine said.

Gemalto's product offerings include smart card and EMV payment cards, and the company also has expertise in government e-documents security as well as biometrics. Plus, the Gemalto portfolio is also attractive to Thales in the area of connected data and objects, according to Caine.

"Gemalto is ideally positioned to address the security of the industrial internet of things, thanks to the combination of its unique expertise in mobile embedded software and enterprise security," he said.

In terms of market opportunity, EMV card adoption is not universal around the world, with significant opportunity for growth in the years ahead, Caine said. He also sees a large opportunity for growth in IoT and enterprise security.

According to Caine, Thales is active in five key areas: aeronautics, space, ground transportation, defense and security. Thales has been actively investing in recent years to grow its technology base and market reach, specifically in the areas of data analytics and security. In October 2015, Thales acquired data encryption vendor Vormetric for $400 million. In April 2017, Thales acquired machine learning vendor Guavus for $215 million.

Caine said Gemalto is a complementary fit for Thales that will help the company address and secure all steps of the digital decision chain, from data generation to real-time decision making. 

"Gemalto brings expertise in endpoint security, while Thales has cloud and data protection," he said.

According to Caine, the combination of Thales and Gemalto will create a world leader in security that is second behind only Symantec in terms of revenue. The combined company will have a portfolio of over 20,000 patents and will invest 1 billion euros a year on research and development efforts.

"Gemalto will become our global security business unit, representing about 20 percent of Thales group revenue," he said. "In parallel with its crucial mass of 16,000 employees, this new GBU [global business unit] will become a powerful driver of digital transformation across all our vertical markets."

Sean Michael Kerner is a senior editor at eWEEK and Follow him on Twitter @TechJournalist.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.