NEUILLY-SUR-SEINE (dpa-AFX) - Thales (THLEF.PK) and Gemalto (GTOFF.PK) said that they have reached an agreement on a recommended all-cash offer for all issued and outstanding ordinary shares of Gemalto, for a price of 51 euros per share cum dividend. The offer price represents a premium of 57% over the closing price as of 8 December 2017. The offer reportedly values Gemalto at 4.8 billion euros.
The Gemalto Board has decided to unanimously support the transaction and recommend that Gemalto's shareholders accept the offer and vote in favour of the resolutions relating to the offer at the upcoming Extraordinary General Meeting. Furthermore, all members of Gemalto's Board who hold shares for their own account have committed to tender all those shares into the offer.
Thales will be able to finance the offer through its available cash resources and through new debt arrangements. In connection with the offer, Thales has secured a €4.0 billion fully committed credit agreement.
Thales does not anticipate any reduction in Gemalto's workforce as a consequence of this transaction.
Thales has committed to preserve employment in Gemalto's French activities until at least the end of 2019. Thales recruited 6,000 people worldwide in 2017, and will actively pursue its human capital investments in the future.
Thales estimates that the combination will generate run-rate pre-tax cost synergies of 100 million euros to 150 million euros by 2021, as well as meaningful revenue synergies.
The transaction will generate mid to high teens adjusted EPS accretion, pre synergies, as of the first year post closing. The acquisition's return on capital employed (including synergies) will exceed Thales's cost of capital within 3 years following the closing of the acquisition.
Thales and Gemalto may terminate the Merger Agreement if a third-party offeror makes an offer which, in the opinion of the Gemalto Board, taking into account certainty, timing, financing, strategic fit, consequences for employees and other non-financial aspects of Thales's offer, is substantially more beneficial than Thales's offer and exceeds the offer price by 9% at least.
In the event of a Superior Offer, Gemalto shall give Thales the opportunity to match such offer, in which case the Merger Agreement may not be terminated by Gemalto. Gemalto has agreed in the Merger Agreement to customary non-solicitation undertakings.
On termination of the Merger Agreement by Thales on account of a material breach by Gemalto or in the event of a third-party offer at a higher price, Gemalto will pay a termination fee of 60 million euros to Thales.
The transaction is expected to close shortly after Thales has secured all customary regulatory approvals and clearances, which is expected for the second half of 2018. Thales's and Gemalto's works councils will be informed shortly.
Copyright RTT News/dpa-AFX