Thales completes acquisition of Gemalto

French technology giant the Thales Group has completed its acquisition of Netherlands-based digital security firm Gemalto for €4.8bn.

The merger creates an 80,000-strong organisation in 68 countries that is focused on cyber security and digital identity, with projected revenues of €19bn and self-funded research and development (R&D) of €1bn a year.

With the addition of Gemalto’s technologies and talent, Thales is expected to tackle challenges such as unmanned air traffic management, data and network cyber security, airport security and financial transaction security.

The company said it is now able to cover the entire critical decision chain in an increasingly interconnected and vulnerable world, with capabilities spanning software development, data processing, real-time decision support, connectivity and end-to-end network management.

The acquisition was given the go-ahead after Thales agreed to sell nCipher, its general-purpose hardware security module (HSM) business, to trusted identity and secure transaction technology firm Entrust Datacard.

Thales acquired UK-based encryption firm nCipher in 2008, but a number of antitrust agencies, including the European Commission (EC), objected to the acquisition of Gemalto because it would create a monopoly in the general-purpose HSM market.

The EC found that the proposed merger would lead to very high combined market shares and would eliminate the competitive constraints that Thales and Gemalto exercised on each other in the general-purpose HSM market.

The acquisition of Gemalto brings together a wide portfolio of digital identity and security offerings based on technologies such as biometry, data protection, and cyber security.

According to Thales, this will provide a “seamless response” to customers, including critical infrastructure providers such as banks, telecom operators, government agencies, utilities and other industries as they tackle the challenges of identifying people and objects and keeping data secure.

Thales said R&D is at the core of the new group, with its 3,000 researchers and 28,000 engineers. Thales currently holds 20,500 patents, with 400 registered in 2018. Future R&D is expected to focus on the likes of big data, artificial intelligence, cyber security and the internet of things.

Gemalto will be one of Thales’s seven global divisions, to be named Digital Identity and Security (DIS), and will interact with all the group’s civil and defence customers.

Thales said it plans to expand its operations in five regions, increasing its workforce just over fourfold in Latin America  to 2,500, trebling its presence in Northern Asia and Southeast Asia to 1,980 and 2,500 respectively, increasing its staff in India from 400 to 1,150 and in North America from 4,600 to 6,660.

“With Gemalto, a global leader in digital identification and data protection, Thales has acquired a set of highly complementary technologies and competencies with applications in all of our five vertical markets, which are now redefined as aerospace, space, ground transportation, digital identity and security, and defence and security,” said Patrice Caine, chairman and CEO of Thales.

“These are the smart technologies that help people make the best choices at every decisive moment. The acquisition is a turning point for the group’s 80,000 employees. Together, we are creating a giant in digital identity and security with the capabilities to compete in the big leagues worldwide.”