Atos, a global leader
in digital transformation, announces that it has made a formal proposal to
acquire Gemalto [Euronext Amsterdam: GTO] by way of a public offer for all of
Gemalto issued and outstanding shares. Atos invited Gemalto’s Board of
Directors to engage discussions and review collaboratively this potential
transaction. On November 28, 2017, Atos has delivered an offer to the Board of
Directors of Gemalto which is friendly, compelling, and which addresses the
interests of all stakeholders. Since then, Atos has reiterated its friendly
intentions. Considering increased risk that could impact Gemalto’s shares, and
for the purposes of market information, the Atos’ Board of Directors has
decided to make its proposal public while affirming its willingness to engage
into discussions with the objective to come to a transaction recommended by the
Gemalto’s Board of Directors.
Key terms of the Atos
proposal:
• Intended all-cash offer of €46.0 per Gemalto
share (cum dividend), representing a total consideration of approximately
€4.3bn.
• A premium of c. 42% to Gemalto’s last
unaffected closing price as of December 8, 2017, and c. 42% and c. 34% premium
to Gemalto’s 1-month and 3-month volume weighted average trading prices,
respectively.
• The proposed transaction will strengthen
Gemalto’s businesses and will create a leading Group in cybersecurity
technologies and digital services to the benefit of all stakeholders going
forward.
• The acquisition of Gemalto shares will be
entirely financed with Atos’ existing cash resources and fully committed
external debt.
Thierry Breton, Chairman and CEO of Atos said: “Atos has
been following closely, and with a lot of interest, the evolution of Gemalto as
a leading player in digital cyber security, IoT and payment and has long
admired its global presence and strong customer and technology portfolios. We
believe that a 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. Atos has carefully considered the interest of the stakeholders of the
two groups, shareholders, employees, and customers which will all benefit from
the proposed friendly transaction. In addition, Atos comes forward with a long
track-record of successfully integrating management teams, employees and
businesses”
A powerful industrial
combination in three high-growth markets
Strategically, the
combination of Atos and Gemalto will lead to enhanced global leadership in
cybersecurity and digital technologies and services, with highly complementary
offerings, technologies, and commercial footprint:
• Reinforced capabilities in digital cyber
technologies and services and homeland security: the combination will lead to
the creation of a worldwide leader with total revenue amounting to c.
€1.5bn. Gemalto’s offerings in identity and access management, data encryption
and crypto management strongly complement Atos’ capabilities in Artificial
Intelligence (AI), Big Data, High Performance Computers, and cloud
orchestration.
• Enhanced capabilities in IoT/M2M by leveraging
Atos’ Codex data analytics and AI, deep industry knowledge and long-standing
customer relationships, with c. €1bn in combined revenue.
• Consolidation of the Group position as a
leading end-to-end European payment services provider: as a global leader with
approximately €1bn in revenues in 2016, Gemalto has gained unique and deep
expertise in payment solutions. The synergies between Worldline, Gemalto, and
Atos businesses will benefit from end-to-end capabilities across the value
chain and many substantial geographic, technology and services
complementarities.
The combination will
reinforce the two groups in Europe as well as in the United States of America,
first market for the two companies and where the new group will be a key player
in term of investments and jobs creation.
Strong fit in the
interest of both Atos and Gemalto stakeholders
Atos and Gemalto have
long shared a common DNA, which is expected to serve as a strong foundation for
bringing the two companies together. Both groups have a long-standing heritage
of technological and scientific excellence. Both are client-centric
organizations, relentlessly focusing on customer needs and satisfaction. Atos
and Gemalto both put enormous emphasis on attracting, developing and retaining
the very best talent, in an increasingly competitive and global environment.
Finally, Atos and Gemalto share a long-standing experience in cybersecurity for
its clients in both private and public sectors.
Atos has demonstrated
in the past its integration capabilities, in particular with the successful
integration of the 33,000 employees of the Siemens Information Systems, the
9,300 employees of Bull and the 9,600 employees of Xerox ITO, transactions
which have been beneficial to all stakeholders involved. The integration
methodology of Atos will notably entail – with due respect to the social
dialogue framework of both companies – to:
• Immediately and fully mobilize the employee
base of the two groups in order to sustain the continuity of operations and
develop a shared strategic vision in key markets that Gemalto is operating in;
• Welcome Gemalto’s employees as soon as the
proposed transaction is completed and foster a joint culture of technological
and scientific excellence, teamwork, and shared pride in being part of a strengthened
global group ideally positioned to face future market challenges;
• Open up new opportunities for Gemalto’s
employees by allowing them to participate fully in the various programs of the
Atos Group.
It is key for Atos to
retain Gemalto’s talents within the combined group. With the cooperation of
Gemalto’s management, Atos is very confident in its ability to implement a
smooth and successful integration of Gemalto’s employees. By way of background,
Atos hires more than 10,000 engineers annually, and has obtained multiple
awards as a great place to work across countries. Atos will obviously respect
all the existing employment terms of the employees of Gemalto.
Regarding Gemalto’s
clients, Atos believes the combination will greatly enhance the breadth and
depth of existing commercial relationships. Clients will obviously benefit from
continued and relentless focus on their needs, but also from a broader set of
capabilities contributed by Atos (e.g. holistic approach in digital security,
deep industry expertise in IoT/M2M, positioning across the full payments value
chain, new technology expertise in AI, Big Data, High Performance Computing,
cloud orchestration) but also from the increased scale and stability of the
combined group.
Significant value for
Gemalto’s shareholders
Atos believes this
proposal presents an opportunity for Gemalto’s shareholders to realize
extraordinary value for their shares in Gemalto. It provides them with a
premium valuation and the opportunity to receive substantial and immediate cash
consideration. The proposed offer price represents a premium of c. 42% to
Gemalto’s last unaffected closing price as of December 8, 2017, and c. 42% and
c. 34% premium to Gemalto’s 1-month and 3-month volume weighted average trading
prices, respectively.
Strong financial
capability
Atos has strong
financial capabilities and intends to finance the all-cash offer using existing
cash resources and fully committed external debt. For this purpose, Atos has
secured financing for the transaction with two major international banks which
have agreed to underwrite the full amount of the offer. The financing package
including the credit agreement is all agreed in final form and actionable.
Moreover, the leverage contemplated after completion of the proposed
transaction will preserve financial firepower for the combined group to expand
further and participate in future steps of industry consolidation.
Commitments to R&D
effort and Gemalto’s brand
Preservation of
Gemalto’s strong R&D capabilities and skills is also key to Atos,
consistent with its culture of technological and scientific excellence. By
joining forces, the two groups will benefit from increased scale and relevance
and create a formidable innovation powerhouse, notably by capitalizing on the
adjacencies between digital security, payments, machine learning and quantum
computing.
Atos will also expect
the combined group to capitalize on Gemalto’s recognized brand, viewed as a
strong asset.
Management
Atos appreciates the
achievements of Gemalto’s management team, in particular in transitioning its
business model. Atos expects key executives to remain involved and help drive
the combined group’s strong ambition, in the same way Atos successfully
included Siemens’, Bull’s and Xerox ITO’s key people in its development.
* *
*
Atos, in conjunction
with its financial and legal advisors, has devoted significant time and
resources to analyzing a potential combination with Gemalto and is confident in
its ability to execute and complete the proposed transaction and to swiftly
obtain all necessary regulatory approvals, in particular for anti-trust
regulation which has already been deeply assessed.
Atos has submitted a
friendly proposal to Gemalto to combine their respective businesses by way of
an allcash public offer for all issued and outstanding ordinary shares of
Gemalto. The proposed offer will be subject to pre-offer and offer conditions
customary for transactions of this nature, including but not limited to a
minimum acceptance level and required regulatory clearances. Atos will
determine and confirm the conditions to the offer in accordance with applicable
laws in the Netherlands and in France.
Atos will file its
offer with the Dutch Authority for the Financial Markets (Autoriteit
Financiële Markten, AFM) and wishes to move swiftly with the negotiation of
a merger agreement, with a view to come to a recommended transaction. Atos
expects such merger agreement to be customary for transactions of this nature,
including in particular with respect to non-financial covenants relating to
employees, integration and strategy.
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