Thales Launches Its Offer on All Gemalto Shares

  • Security
  • 28.03.2018 07:12 am

With the publication of the Offer Document today and with reference to the joint press release dated 17 December 2017, Thales (Euronext Paris: HO) and Gemalto (Euronext Amsterdam and Paris: GTO) announced today that Thales is launching its recommended all-cash offer (the "Offer") to all holders of issued and outstanding shares in the capital of Gemalto for EUR 51.00 per share, cum dividend.

Patrice Caine, Thales’s Chairman and Chief Executive Officer, commented: “The publication of the Offer Document is the first major step of the proposed acquisition of Gemalto, to create a world leader in digital security.”

Philippe Vallée, Gemalto’s Chief Executive Officer, added: “Thales’s and Gemalto’s teams are working together to obtain the required authorizations for the success of the operation.”

Alex Mandl, Chairman of Gemalto’s Board of Directors, stated: “After full and careful review with its financial and legal advisors of the various options available to the company, the Gemalto Board of Directors unanimously recommends Gemalto’s shareholders tender their shares into the Offer. I am counting on the support of all the company’s shareholders for the upcoming general meeting.”

Transaction highlights

  •   Recommended all-cash offer for all the issued and outstanding ordinary shares in the capital of Gemalto (each, an “Ordinary Share”), including Ordinary Shares represented by American Depositary Shares (each, an “ADS”), with every two ADSs representing one Ordinary Share (Ordinary Shares and ADSs are collectively referred to in this press release as the “Shares” and each, a “Share”), at an offer price of EUR 51.00 (cum dividend) per Ordinary Share (the "Offer Price") and EUR 25.50 per ADS.

  •   The Gemalto’s Board of Directors fully supports the Offer and unanimously recommends shareholders tender their Shares. All members of the Gemalto Board who have Shares have irrevocably committed to tender all of their Shares into the Offer.

  •   Thales and Gemalto have agreed on certain non-financial terms, including:

o Thales to combine its digital assets with Gemalto, creating a world leader in digital security;

o increased R&D expenses which remain at the heart of the digital security businesses of Thales and Gemalto;

o existing rights of Gemalto employees will be respected; o Gemalto’s brand will be maintained.

  •   The acceptance period (the “Acceptance Period”) will commence on 28 March 2018 at 9:00 hours CET (3:00 am New York time), and will end on 6 June 2018 at 17:40 hours CET (11:40 am New York time). Thales plans to extend this period until customary conditions for a transaction of this kind are met, in particular obtaining the required regulatory clearances. The payment of the Offer Price to the shareholders who tendered their Shares into the Offer is expected in the course of the second half of 2018, provided that the Offer is declared unconditional.

  •   In parallel, Gemalto shareholders will be invited to attend the shareholders’ meeting on 18 May 2018.

  •   The consummation of the Offer is subject to the satisfaction or waiver of conditions that are customary for transactions of this kind, including:

o a minimum acceptance level of at least 67% of Gemalto shares;
o having obtained the required regulatory clearances;
o no material adverse effect having occurred and continuing;
o no material breach of the merger agreement having occurred; and o no Superior Offer having been made or agreed upon.

  •   Gemalto has made available on its website the Position Statement (as defined below) providing further information to shareholders, including the recommendation on the Offer and the agenda for Gemalto’s annual general meeting.

  •   Thales and Gemalto have also made available on their websites a French summary of the Offer Document including in particular the description of the tendering procedures applicable to French shareholders and the material French tax aspects of the Offer.

    Creation of a global digital security leader

    By combining their businesses, Gemalto and Thales have the intention to create a leading global player in digital security.

    Acceleration of Thales’s digital strategy

    Over the past three years, Thales has significantly increased its focus on digital technologies, investing over EUR 1 billion in connectivity, cybersecurity, data analytics and artificial intelligence, in particular with the acquisition of Sysgo, Vormetric and Guavus. The integration of Gemalto strongly accelerates this strategy, reinforcing Thales’s digital offering, across its five vertical markets (aeronautics, space, ground transportation, defence and security).

    Unique and innovative technology portfolio in IoT, mobile and cloud worlds

    Combined with Gemalto’s unique leading digital security portfolio, Thales will be ideally positioned to offer end-to-end solutions to secure the full critical digital decision chains, from data creation in sensors to real-time decision making. This unrivalled and innovative technology portfolio will put Thales in a highly differentiated position to provide enterprises and government agencies with a seamless response to the data security challenges that lie at the heart of their digital transformation.

By acquiring Gemalto, Thales adds around EUR 3 billion of revenue to its digital business sales and acquires a set of technologies and competencies that have applications across Thales’s five vertical markets. The combination creates a powerhouse with a solution portfolio including 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.

Capacity to address all customer digital security needs

Thales will combine its digital businesses with Gemalto, which will continue to operate under its own brand as one of the seven Thales global business units. Both Thales and Gemalto management teams share a common industrial vision and endorse the growth project of this newly created digital security global business. The Gemalto CEO, Mr. Philippe Vallée, will lead this newly created “Digital Security” global business unit.

R&D: the common DNA of Thales’s and Gemalto’s digital businesses

Gemalto and Thales are technology-driven companies with world-class R&D capabilities. R&D is at the core of Thales’s and Gemalto’s digital security businesses, and will remain so. The future entity can access five Thales R&D centers worldwide and its portfolio of 16,500 patents. In 2017, Thales increased its R&D investments by 9% and will continue its efforts in 2018, with growth of 10%, faster than sales. The combination will result in a combined group of more than 28,000 engineers and 3,000 researchers, which will invest more than EUR 1 billion annually in self-funded R&D.

Offer fully supported and unanimously recommended by the Board of Directors of Gemalto
The merger agreement regarding the combination of Thales and Gemalto was entered into at the time when a unilateral unsolicited offer for Gemalto’s shares was announced by Atos. The Board of Directors of Gemalto considered that Atos’s unsolicited and conditional offer was not compelling when compared with Gemalto’s standalone strategy. Thales’s subsequent approach to Gemalto set into motion constructive discussions on the terms of a combination and the strategic rationale thereof.
Throughout the process, Gemalto has discussed on a frequent basis the progress of the discussions and negotiations with Thales and the key decisions in connection therewith. The Board of Directors of Gemalto, with the support of its financial and legal advisors, has given careful consideration to all aspects of the Offer, including the strategic, financial, operational and social points of view.

Each of Deutsche Bank AG, Paris Branch and J.P. Morgan Securities plc delivered a fairness opinion to the Board of Directors of Gemalto dated 16 December 2017 indicating that - as of such date and based upon and subject to the factors, qualifications and assumptions set forth in the fairness opinions - the Offer Price to be paid to the shareholders pursuant to the Offer was fair from a financial point of view to the shareholders.

In the merger agreement, Thales and Gemalto agreed on the undertakings that the Board of Directors of Gemalto had identified as relevant for its support of the proposal put forth by Thales. The merger agreement signed between Thales and Gemalto thus provides for (i) a strategic direction that is in the best interest of Gemalto and promotes the sustainable success of its business, (ii) adequate protection for all stakeholders, (iii) deal-certainty and (iv) a fair price.


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