French Company Thales to Acquire Gemalto for 4.8 BIllion Euros

Aerospace and defense group -Thales has agreed to buy chipmaker Gemalto for 4.8 billion euros ($5.6 billion), trumping an earlier bid by fellow French firm Atos to expand in the fast-growing digital security market.

The bidding race for Gemalto has come after a difficult year for the Franco-Dutch group in which profit warnings have hurt its share price and overshadowed its attempt to shift from a slowing market for phone SIM cards towards security services such as data encryption and biometric passports.

"This is a terrific project," Thales CEO Patrice Caine told media on Sunday. "In digital, Gemalto and Thales are like twins."

Caine said his firm's bid represented a total of 5.6 billion euros ($6.6 billion), including 800 million of debt in addition to its offer for shares.

This showed its basic 51 euro per share offer for Gemalto was worth 4.8 billion euros in comparison with Atos' 4.3 billion bid based on a 46 euro per share price.

The Atos' Bid

Atos, which saw its offer rejected by Gemalto this week, said in a statement later on Sunday that it would not pursue its bid, although it would be open to talks with Gemalto if Thales' offer fell through.

Thales' all-cash bid has the unanimous backing of the both companies' boards, Thales and Gemalto said in an earlier statement.

Future Plan

The agreement calls for Thales' digital activities to be merged with Gemalto to create a business with 3.5 billion euros in sales which would be a top-three global player in digital security, they said.