Gemalto to acquire SafeNet for $890 million

AMSTERDAM, NETHERLANDS: Gemalto, the provider in digital security, has signed a definitive agreement to acquire a player in data protection and software monetization, from Vector Capital for US$890 million on a debt free/cash free basis.

Headquartered in Belcamp, Maryland, USA, and presently located in 27 countries, SafeNet is provider in digital information security companies in the world, trusted to protect, control the access to, and manage sensitive data and high value software applications.

Customers utilizing SafeNet solutions include Banamex, Bank of America, Cisco, Dell, Hewlett-Packard, Kaiser Permanente, Netflix, Starbucks and many more of the world's best known companies.

In 2013, SafeNet recorded revenues of US$337 million and profit from operations of US$35 million and expects revenues of US$370 million and profit from operations of US$51 million for 2014.

As Gemalto enters into its 2014-2017 multi-year development plan, the digital world enters a period in which proper control over sensitive information is paramount.

Once the acquisition is completed, SafeNet will significantly reinforce Gemalto's identity and access management business. It will become part of Gemalto's payment and identity segment, and its platforms and services activity, that account respectively for €1,329 million and €715 million of the 2013 pro forma revenue.

The purchase price of US$890 million is self-funded with US$440 million from available cash, and US$450 million drawn from existing long-term credit facilities.

Depending on market conditions, Gemalto may refinance the credit facilities through a bond issuance or other means at a later date. The closing of the transaction is expected to occur in Q4 2014, after approval from the relevant regulatory and antitrust authorities.

After the acquisition is completed, Gemalto will retain a strong financial structure with a net debt/EBITDA ratio < 1. The transaction will be accretive to adjusted EPS (Earnings Per Share) before purchase price allocation upon completion.

As a result of the acquired business's anticipated profitability, growth and synergies, Gemalto expects to surpass its 2017 profit from operations2 objective of €600 million by approximately +10 percent.