PARIS, Wed: Axalto, the world’s second largest smart-card provider, is offering to buy its larger rival Gemplus in an all-share deal that will create an industry giant with combined 2005 sales of e1.8 billion (e1 = RM4.45). If the deal goes ahead, Gemplus shareholders would end up with 55.5 per cent of the combined business which, at yesterday’s closing price, would have a total market capitalisation of e2.3 billion.
Axalto would own 44.5 per cent of the new entity called Gemalto, to be registered in the Netherlands. Analysts said the transaction could be referred to the European Competition Commission as the two companies together have about half of the world market for mobile phone SIM cards. The pair, whose smart cards are also fitted in credit cards and pay-TV set-top boxes, have about 48 per cent of the global market for smart-cards with microprocessors. “The deal is likely to be looked at closely by competition authorities,” said one London-based analyst.
The running of the newly-formed business will be shared between Gemplus chief executive officer (CEO) Alex Mandl who will act as executive chairman and Axalto CEO Olivier Piou who will be chief executive. Shareholders, who also have to approve the deal, could express concern about the efficiency of a dual executive, some analysts said.
Gemplus shareholders will be offered two Axalto shares for every 25 of their own and receive an exceptional pay-out of e0.26 a share — e163 million in total — prior to the proposed exchange. In light of the two companies’ solid cash resources, the pair said they would propose, once the deal was closed, a share buyback covering up to 10 per cent of Gemalto shares. — Reuters