* Gemalto to buy SafeNet from PE firm Vector Capital
* Deal to be funded with cash and debt and close in Q4
* Gemalto to beat 2017 op profit target by c. 10 pct
* Shares rise 3.9 percent
(Adds Breakingviews link)
By Natalie Huet
PARIS, Aug 8 Gemalto NV, the digital
security company that makes smart chips for mobile phones, bank
cards and biometric passports, is to buy U.S.-based data
protection specialist SafeNet for $890 million, it said on
Friday, in a move set to boost its earnings and reach.
Gemalto has signed a definitive agreement to buy all of
SafeNet's shares from private equity firm Vector
Capital, using its available cash and credit facilities, the
Amsterdam-based company said in a statement.
The deal will expand Gemalto's customer base to major U.S.
clients and strengthen its offering in data protection at a time
when cybersecurity is a growing headache for corporations and
government agencies alike.
Gemalto expects the deal will close in the fourth quarter
and enable it to beat by around 10 percent its 2017 target for
profit from operations of 600 million euros ($801.60 million).
Gemalto's shares were 3.9 percent higher at 71.95 euros at
0834 GMT, by far the top gainers on France's CAC 40 blue-chip
index, down 0.3 percent, and the second-best performers
on the European STOXX 600 index, down 1 percent.
"At first glance, it looks a sensible deal," said brokerage
Mirabaud Securities, which has a "buy" recommendation on the
stock and a price target of 95 euros. "We hope this acquisition
can reignite interest in the company and its leadership position
in digital security."
The tie-up comes amid a growing number of high-profile data
breaches. Earlier this week, The New York Times reported that a
cybersecurity firm uncovered about 1.2 billion Internet logins
and passwords amassed by a Russian crime ring.
SafeNet provides data protection solutions including
encryption technologies and authentication systems with its
technology used to protect of 80 percent of intra-bank
transfers worldwide, the company said.
The deal values SafeNet at 2.4 times its forecast full-year
revenue, and 17.4 times its estimated operating profit. That is
in line with the sales and earnings multiples for Gemalto, which
has a market capitalisation of about 6.3 billion euros ($8.4
Shares in Gemalto, which pioneered the use of smart cards,
have fallen 10 percent in the past year over worries about its
growth prospects and trade at a sharp discount to those of its
peers such as Ingenico and STMicroelectronics
whose price-earnings ratio is above 20.
Headquartered in Maryland, SafeNet has 1,500 staff and
operations in 27 countries. It has over 25,000 clients in some
100 countries, including government agencies and major
corporations such as Cisco, Bank of America,
Hewlett-Packard and Netflix.
SafeNet reported revenue in 2013 of $337 million and a
profit from operations of $35 million and expects revenue this
year of $370 million and a profit of $51 million.
Gemalto said it would finance the deal using $440 million
from available cash and $450 million from existing long-term
(1 US dollar = 0.7471 euros)
(Additional reporting by Alexandre Boksenbaum-Granier; Editing
by Sunil Nair and Greg Mahlich)