Atos Bids 4.3 Billion Euro for Gemalto to Form French Tech Giant

Atos made a 4.3-billion-euro unsolicited bid for  Gemalto with the backing of the French state’s investment bank, seeking to create a European leader in cybersecurity, digital technologies and payment services, according to Bloomberg.

Atos is proposing to pay 46 euros a share in cash, 36 percent above previous closing price. It called the offer friendly and said it wants to engage in discussions about a deal, which would be the biggest of the year between two European technology companies. Gemalto, a security software company that’s seen its stock battered this year by a series of profit warnings and operational setbacks, said it’s  reviewing the proposal, which it described as conditional.

Thierry Breton, the former French finance minister who runs Atos, said the company is “absolutely determined“ to complete the transaction, and that it has the backing of Gemalto’s biggest shareholder, state-run investor Bpifrance Financement. A representative for Bpifrance said the fund won’t comment on Atos’s bid, but welcomes consolidation of French technology players.

Gemalto’s shares had dropped 38 percent this year through this week, after a March cut in outlook, an April warning that demand from U.S. banks was dipping, a July announcement of an impairment charge, and a delay in September in presenting a new strategic plan. Atos, by contrast, had seen its stock jump 24 percent in the same period.

Atos has been on a buying spree in recent years in a bid to enter new regions and add a broader range of products, including in health care. And Gemalto’s shift from SIM cards to software and cybersecurity had initially paid off under Olivier Piou, the company’s previous CEO, until he announced his retirement last year. His successor, Philippe Vallee, has faced mounting challenges as it became clear that the company had overestimated the pace at which customers would shift to new technologies, especially the transition to chip-and-PIN bank cards in the U.S.

Gemalto said it will review the bid and determine the best course of action before responding by Friday. The company has retained Deutsche Bank and JPMorgan as an adviser and said there is no certainty the proposal will lead to a firm offer. While Gemalto is incorporated in Amsterdam, it was formed from the combination more than a decade ago of French and Luxembourg companies, and is run from France.