Gemalto

Gemalto is a publicly traded company incorporated in the Netherlands. Headquartered in Amsterdam, the company operates in 43 countries (data for 2014). The company was formed in 2006 after the merger of Axalto and Gemplus.

In addition to chip modules, Gemalto produces keys (tokens), various types of plastic cards, including those that store biometric information, equipment for reading data from them, develops software for working with such devices.

The Company offers secure personal devices such as:

• subscriber identification modules (SIM),
• universal integrated circuit cards (UICC) in mobile phones,
• bank smart cards,
• electronic passports, and
• USB markers for online identity protection.

Gemalto also provides software.

Performance indicators

2018: Revenue - €2.97 billion; profit - 211 million euros

In 2018, Gemalto's revenue amounted to 2.97 billion euros, which is almost exactly the same as a year ago. If you do not take into account fluctuations in exchange rates, then the company's sales increased by 3%.

In the Identity, IoT & Cybersecurity division, under which Gemalto contracts with government agencies in the field of national security, corporate clients in the field of cybersecurity and industrial enterprises in the region, internet of things annual revenue was equal to 1.38 billion euros. This is 8% more compared to 2017, and in constant currencies there was an 11% increase. Identity, IoT & Cybersecurity generated 47% of the company's revenue.

Gemalto financials

The remaining share is occupied by the Smartcards & issuance division, which oversees the issuance of SIM and payment cards, as well as the provision of their insurance services. This also includes the patent licensing business. Sales at Smartcards & issuance reached 1.59 billion euros at the end of 2018, down 6% taking into account changes in exchange rates and 3% excluding this factor.

The company earns the most in Europe, the Middle East and Africa (EMEA): in 2018, the vendor earned 1.4 billion euros there, which is 2% more than a year earlier. In the states of the Americas, revenues rose by 4%, to 1.05 billion euros. In the Asian market, Gemalto's turnover decreased by 12% and amounted to 516 million euros.

In 2018, Gemalto's net profit increased to €211m from €175.9m a year earlier. The profit of Identity, IoT & Cybersecurity amounted to 137.4 million euros in 2018, compared to 139.4 million euros in 2017. Smartcards & Issuance recorded a profit of €194.8 million, up from €170.1 million a year earlier.^[1]

Business in Russia

Distributors:

• Inpas - part of the ITG holding, is engaged in the production of electronic plastic cards and the distribution of chips for them;
• NKT

2019: 5.4% decrease in revenue to RUB 3.49 billion

At the end of 2019, Gemalto (Tales Diayes LLC) took 37th place in TAdviser Ranking: the 50 most profitable representative offices of foreign IT companies in Russia. The company's revenue in 2019 amounted to 3,495,919 thousand rubles, which is 5.4% lower than in 2018.

2018: Revenue - RUB 3.69 billion

The revenue of Gemalto (Tales Diayes LLC) in 2018 amounted to 3,696,487 thousand rubles.

2010: Conflict with Rosan

In August 2010, Inpas announced that, at the request of its French partner, Gemalto, it had stopped supplying its chip modules for bank cards to Rosan. This information was confirmed by Vyacheslav Kalinin, Sales Director of Gemalto in Russia, adding that a similar notification regarding Rosan was sent to another distributor of Gemalto, NKT.

"We stop working with Rosan because this player began to dump and oust two of our distributors from the market," Kalinin said. "In addition, Rosan is increasingly focused on cooperation with our Korean competitor - KEBT." In addition, according to Kalinin, at the end of 2010 Gemalto opens its own personalization bureau in Russia and expects to work directly with Russian branches of Western banks

Commercial director of Rozan Timur Rodionov told CNews that the company has not yet received an official letter from Gemalto, and until that moment he cannot comment on the situation.

Vyacheslav Kalinin estimated Rosan's share in the total Russian supply of Gemalto chips for bank cards at 15-20%. The French vendor expects to compensate for these losses through deliveries to other players, including Sitronics and Novokard. On their part, Gemalto sees no threat to its distributors.

"Because of this decision, both companies will lose," said Andrey Panagushin, commercial director of Citronics Smart Technologies (CCT). - Rosan's losses are relations with the leader in the smart card market, but Gemalto itself will lose more, because Rosan is the strongest Russian player in terms of bank cards. The company has many direct contracts with banks. " NKT, according to Panagushin, is engaged only in distribution, but does not produce cards on its own, and Inpas is "completely invisible in the bank card market."

History

2017

Thales buys Gemalto for €4.8bn

On December 17, 2017, the French manufacturer of IT systems for the military Thales announced the purchase of Gemalto for 4.8 billion euros. This amount turned out to be about 500 million euros more than the one offered by the IT service provider Atos and which Gemalto called "mercantile."

I am convinced that the merger with Thales is the best and most promising option for Gemalto and the most positive outcome for our company, employees, customers, shareholders and other stakeholders, "said Gemalto CEO Philippe Vallée.

Gemalto buys IT systems maker for military Thales for €4.8 billion

According to Patrice Caine, Chairman of the Board of Directors and Head of Thales, the acquisition of Gemalto marks a key milestone in the implementation of the strategy of the French industrial group.

Thales will merge its digital division with Gemalto, which will continue to operate under its brand in the process. Valle will lead the combined business, which is predicted to receive revenues of 3.5 billion euros and enter the top three leaders in the global digital security market.

The agreement assumes Gemalto's valuation of 51 euros per share, 57% above the figure as of December 8, 2017 - the last exchange day before Atos made a public offer to the Dutch company.

Thales and Gemalto can still terminate the contract if there is an offer that turns out to be at least 9% more.

Meanwhile, the merger of Thales and Gemalto was unanimously backed by the boards of both companies. The French government, which owns 8% of Gemalto, previously agreed to sell the vendor to Atos. The decision of the authorities on the deal with Thales by December 18, 2017 is unknown.

The French company has already begun to take measures to get a positive decision from the government: in particular, Thales has promised not to fire Gemalto employees in France until the end of 2019.^[2]

Atos Bid Rejection

On December 13, 2017, Gemalto rejected the proposal to merge with Atos, considering the valuation of 4.3 billion euros ($5 billion) not high enough.

Chairman of the Board of Directors of Gemalto Alex Mandl and CEO Philippe Vallée sent a letter to the head of Atos Thierry Breton stating the following:

We believe Gemalto is best developed by being independent and delivers long-term value to stakeholders, including shareholders.

Atos offered the purchase of Gemalto for 46 euros per share. Gemalto says that this cost does not take into account the company's emphasis on working with government and corporate clients, as well as business in the field of cybersecurity and machine learning.

Gemalto did not want to sell Atos for $5 billion

In addition, Gemalto criticized Atos for lacking a "detailed explanation of the operating structure and potential synergy" from the merger, and for the board "significantly underestimating" Gemalto.

In the letter, Gemalto management calls Atos's offer "mercantile," because, as noted, the French company is trying to buy Gemalto at a price 27.4% below the exchange high of the last 12 months and only with a 3.5% surcharge on the average value of securities for a 12-month period of time.

Atos unveiled an "unconvincing" strategy for the potentially combined company, Philip Valli said. He also did not rule out that the company could agree to a new more attractive Atos offer.

According to Kiplink Finance stock manager Philippe Cohen, Atos' initial offer was expected to be low, and the company is likely to offer more.

After receiving the rejection of Gemalto, Atos quotes fell 2.8%.^[3]

Atos offers €4.3bn Gemalto purchase

On December 11, 2017, the French IT company Atos made an official offer to buy Gemalto for 4.3 billion euros.

Atos is ready to pay Gemalto shareholders 46 euros for each security they own, which is 42% more than the company's quotes by the close of the exchange on December 8, 2017, the press release said.

Atos is going to finance the purchase of Gemalto with its own and credit funds. Two banks have already agreed to issue a loan if the transaction is approved.

Atos made an official offer to buy Gemalto for 4.3 billion euros

At the time Atos made a formal takeover bid for Gemalto, the latter refrained from commenting. However, according to the CEO and chairman of the board of directors of Atos Thierry Breton, the deal was supported by the largest shareholder of Gemalto - the French state bank Bpifrance (owns an 8.5 percent stake in Gemalto).

We are confident that the merger of Atos and Gemalto will strengthen our global leadership in the cybersecurity, digital and services markets, and strengthen our position as a leading European payment provider. Atos thoroughly examined the interests of all parties involved in the two groups, including shareholders, employees and customers who would benefit from the alleged friendly deal, Thierry Breton said.

According to him, the company made a purchase offer to Gemalto on November 28, 2017, after which it received consent from Bpifrance to make it public.

During a conversation with reporters, the head of Atos noted that the merger of Gemalto will create a leader in the field of cyber and national security. Both companies have complementary business lines and "the same nature with a technical culture."^[4]

From the beginning of 2017 to December 11, Gemalto shares fell 38% in price, while Atos quotes rose 24%.

2016: Purchase of 3M biometric business for $850 million

In December 2016, 3M announced the sale of the division responsible for the development and sale of identity management solutions. This business is bought by a large developer of digital security technologies Gemalto for $850 million. Read more here.

2014

Business assessment from Gartner analysts

Gartner predicts that by the end of 2017, approximately 50% of organizations will choose cloud services as an option to deliver new or updated user authentication tools, compared to approximately 20% in 2014. To meet this market, Gemalto uses its understanding of authentication and mobile technology to deliver solutions while taking into account the needs of customers for mobility, built-in security and security for employees using their own mobile devices (BYOD) at work.

Thousands of banks, businesses, service providers and governments are using Gemalto's innovative authentication solutions to protect access to their physical and digital assets. Gemalto technologies provide a range of applications for corporations and electronic banking services for employees and customer service. Organizations can use multi-factor authentication with a spectrum of multiple applications based on public key infrastructure (PKI), tokens, mobile generated one-time passwords and digital signatures. The extended portfolios of Ezio and Protiva are designed to equip customers with the means to easily implement cloud or local authentication solutions.

Buying SafeNet

In 2014, Gemalto acquired the American company SafeNet for $890 million.

2009

Revenues for 2009 exceed 1.6 billion euros, profit - 118 million euros. The annual income of the company in 2009 amounted to 165 million euros, the staff - more than 10,000 people working in 75 departments, also work research and service centers in 41 countries.

Notes