Gemalto is braced for a hostile takeover battle after rejecting a €4.3bn (US$5bn) takeover proposal from French technology consulting firm Atos and vowing to press ahead with a standalone strategy.
Amsterdam-listed Gemalto, which is the world’s largest maker of chips found in mobile phones and credit cards said in a statement on December 13 that the unsolicited offer, which was “not friendly and collaborative”, significantly undervalued the company. It has hired Deutsche Bank and JP Morgan as defence advisers.
Gemalto, which relies on Sim cards for about a third of revenues, has struggled in the face of slowing demand for new phones around the world. In July, in the third profit warning in six months, the group said operating profits would be between €200m and €230m in the second half of the year, or a third lower than its previous guidance. It also revealed a €420m writedown because of “deteriorated prospects” in the market.
Thierry Breton, a former French finance minister and CEO of Atos, met Gemalto boss Phillipe Valléeon November 28 to propose a friendly dealthat would create a European leader in cyber security technology.
The offer represented a 42 per cent premium to Gemalto’s closing price on December 8, according to Atos, which said would finance its offer with a combination existing cash resources and fully committed external debtfrom two international banks.
In response Gemalto said the timing of the Atos proposal was “opportunistic, seeking to take control of the company at a price that represents a discount of 27.4 per cent versus its last 12-month high and at a premium of only 3.5 per cent versus its 12-month average share price.”
Gemalto said its move towards higher-growth government, enterprise, cyber security and machine-to-machine activities was not yet reflected in its share price.