European IT services company Atos has made a €4.3 billion ($5.1 billion) bid for Gemalto, the world's biggest maker of SIM cards, in an attempt to create an industry powerhouse in markets for cybersecurity and digital products.
The bid of €46 ($54) per Gemalto share would be funded in cash, said Atos in a statement, and represents a 42% premium to Gemalto's share price on December 8. Following news of the offer this morning, Gemalto's share price had risen 33% in Frankfurt, to €45.23 ($53.30), at the time of publication.
A combination of the two European companies would be able to generate about €3.5 billion ($4.1 billion) in annual sales from cybersecurity, Internet of Things and payments markets, according to Atos.
The acquiring company said that merging its capabilities in artificial intelligence and cloud computing with Gemalto's data encryption and identity expertise would give it €1.5 billion ($1.8 billion) in revenues from cybersecurity.
Another €1 billion ($1.2 billion) would come from IoT and a further €1 billion ($1.2 billion) from the European payment services market, said Atos.
Atos made €11.7 billion ($13.8 billion) in total in its 2016 financial year, when net income was about €638.1 million ($751.9 million). Sales were 9.7% higher than in 2015, with net income up 44.6%.
Gemalto's 2016 revenues were about €3.1 billion ($3.7 billion), up 1% on the 2015 figure in constant currency terms. Its net profit rose from €423 million ($498 million) to €453 million ($534 million) over the same period.
The takeover plans will inevitably stoke concern about "synergies" and layoffs, although Atos was keen to highlight the revenue opportunity in its statement about the deal, and avoided mentioning any cost-cutting plans.
Nevertheless, its remark that it would "respect all the existing employment terms of the employees of Gemalto" could have the opposite effect to the intended one and unsettle employees worried about their jobs.
Atos employed about 100,000 people worldwide in 2016, while Gemalto has around 15,000 staff members on its payroll.
Atos also said that it "appreciates the achievements of Gemalto's management team" and that it "expects key executives to remain involved."
Thierry Breton, the chairman and CEO of Atos, noted his company's "long track record of successfully integrating management teams, employees and businesses" when commenting on the proposed deal.
Atos hires more than 10,000 engineers annually, the company pointed out, and has previously integrated employees from a diverse range of companies it has acquired, including 33,000 that came with Siemens Information Systems (which Atos bought in 2011), 9,300 from Bull (another cybersecurity specialist, which Atos acquired in 2014) and another 9,600 in 2015 with the takeover of Xerox ITO.
The company's total headcount has soared from just 48,000 in 2010, before it embarked on this sequence of takeovers. Revenues that year were just €5 billion.
— Iain Morris, News Editor, Light Reading