Atos proposes to acquire Gemalto

Edit on December 14, 2017: Gemalto management has rejected Atos offer and published a statement on December 13 at 8 PM, stating that the offer "significantly undervalues the Company," and affirming that "Gemalto, the world leader in digital security, is best positioned to grow successfully on a standalone basis and create long term value for its stakeholders, including its shareholders."

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Atos, a major expert in digital transformation headquartered in France, published on Monday evening a statement announcing it has made a formal proposal to acquire Gemalto. The company says its offer was delivered to Gemalto Board of Directors on November 28, 2017, which issued a statement on December 12 saying they were “reviewing and considering the Proposal’ and would give an answer by December 15.

Atos proposes an all-cash offer of EUR 46.00 per Gemalto share (cum dividend), which compares to a share value of EUR 32.89 before the announcement. Atos says this represents a circa 42% premium to Gemalto’s 1-month volume weighted average trading prices. Atos offer values Gemalto at EUR 4.3 billion.

Paris Stock Exchange shows its interest in the project: Gemalto splurged 34.57% yesterday while Atos hiked 7.14%. The French government’s BPI France (Banque Publique d’Investissement) which owns 8.51% of Gemalto is supporting the deal, while Susanne Klatten and Stefan Quandt, whose investment companies combined own a bit more than 10% of Gemalto, will study the Atos offer "with care and composure," according to a statement from the Quandt family office.

According to Thierry Breton, Chairman and CEO of Atos, “the combination of Atos and Gemalto would result in enhanced global leadership in cybersecurity, digital technologies and services and in the strengthening of our positioning as a leading European payment services provider.”

According to Atos, the combination of Atos and Gemalto will lead to enhanced global leadership in cybersecurity and digital technologies and services. While Atos puts forward synergies with Gemalto in digital cyber technologies, homeland security, identity and access management, IoT/M2M, and payment services, one may notice, SIM, eSIM and more globally the telecom market segment is not cited as a priority. One may remember Atos subsidiary, Worldline is positioned as a European leader in the payments and transactional services industry.

Atos is a 100,000 employees group, present in 72 countries, with a EUR 11,717 million

Revenue in 2016 and a net income of EUR 620 million. Atos prides itself with the integration of Siemens Information Systems, Bull and Xerox ITO. Over the last few months, Atos has announced the acquisition of:

• MRL Posnet, a payment service provider based in Chennai, India,

• Digital River World Payments (DRWP), an online global payment service provider from Digital River, headquartered in Stockholm, Sweden

• Pursuit Healthcare Advisors, Conduent’s Healthcare Provider Consulting business and Conduent’s Breakaway Group business, three healthcare consulting companies in the US, accounting for 400 healthcare consultants and EUR 1 billion revenue,

• Siemens Convergence Creators, a provider of communication networks, service and customer management, public safety and security, headquartered in Vienna, Austria,

• First Data Baltics: the payment processor’s subsidiaries in Lithuania, Latvia, Estonia

• Engage ESM, a UK-based provider in the enterprise-service management sector.

Gemalto sales in 2016 reached EUR 3.1 billion, and EUR 186 million in net income. The company has issued four profit warnings over the last months.

After the merger between Oberthur and Morpho to form Idemia, an acquisition of Gemalto by Atos would bring a totally new face to the secure transactions industry.

Disclaimer: I own some Gemalto shares