Thales Sa · EURONEXT:HO
Thales Sa — Merger or Acquisition (December 2017)
28 slides from Thales Sa's merger presentation, Dec 18, 2017
Slide 1: Thales and Gemalto create a world leader in digital security
Thales and Gemalto create a world leader in digital security 18 December 2017 www.thalesgroup.com
Slide 2: Disclaimer
Disclaimer No Offer The Netherlands, such information will be disclosed by means of a press release or other This presentation does not constitute an offer, or any solicitation of any offer, to buy or means reasonably calculated to inform U.S. shareholders of Gemalto of such information. subscribe f
Slide 3: Contemplated transaction
Contemplated transaction ▌ Friendly offer to acquire Gemalto on the basis of €51 per share(1) ▌ A combination based on an industrial project supported by both Thales and Gemalto management teams ▌ Contemplated transaction unanimously recommended by Gemalto’s board of directors and unanimously approv
Slide 4: Creating a world leader in digital security
Creating a world leader in digital security ▌ Compelling strategic rationale for Thales Accelerating Thales’s digital strategy Creating global market leader in fast-growing digital security market ▌ Shared vision for the future Strong industrial and cultural fit Thales to combine its digital assets
Slide 5: Key transaction highlights
Key transaction highlights Consideration €51 in cash per share(1) Implied EV/ 2018E EBIT multiple of 17x(2) Premium 57% premium to Gemalto closing share price of €32.5 on 8 December 2017 48% premium to Gemalto 3-month VWAP of €34.35 Deal protection Exclusivity undertaking from Gemalto, subject to su
Slide 6: Gemalto, a global player in digital security
DRAFT – WORK IN PROGRESS Gemalto, a global player in digital security A highly complementary combination Favorable financial impacts Next steps
Slide 7: Gemalto, a global player in digital security
Gemalto, a global player in digital security 2016 revenue breakdown Mobile platforms ▌ Global specialist in authentication systems By division & services: 8% and data protection Mobile embedded Payment: 32% software and ▌ Leading technologies with applications products: 19% Payment & Mobile: 38% in
Slide 8: Securing identities, connected objects & data
Securing identities, connected objects & data (Percent of 2016 revenue) Mobile platforms & services: 8% Payment: Mobile 32% embedded software and platforms: 19% Securing Securing connected objects identities and data Machine to Government machine (IoT): programs: 16% 10% Enterprise security: 15% Tha
Slide 9: Ideally positioned on the fastest-growing digital security segments
Ideally positioned on the fastest-growing digital security segments Securing Continued EMV card migration and innovation identities Innovative e-payment services Resilient and growing government market underpinned by strong secular trends (eID, eGovernment) Increasing use of biometrics for physical
Slide 10: A highly complementary combination
DRAFT – WORK IN PROGRESS Gemalto, a global player in digital security A highly complementary combination Favorable financial impacts Next steps
Slide 11: Thales's competitive advantage built on a unique business model
Thales’s competitive advantage built on a unique business model Addressing some of the most 1 demanding vertical markets… Aeronautics Space Ground Defence Security transportation + Critical decision chain …with a 2 unique portfolio Sensing and Data Data processing of key technologies transmission an
Slide 12: Gemalto accelerating the implementation of Thales's digital strategy
Gemalto accelerating the implementation of Thales’s digital strategy Data Data processing Critical Sensing and transmission and decision decision chain data gathering and storage making Key digital Connectivity, Cyber- Big data(b) and Artificial mobility, IIoT(a) intelligence technologies security d
Slide 13: Powering and securing the complete critical digital decision chain
Powering and securing the complete critical digital decision chain Critical Data Data processing Sensing and decision data gathering transmission and decision chain and storage making Critical Computing / Network & Connectivity Application & Application & Sensors Big Data/AI digital Connectivity Gat
Slide 14: Creating a world leader in digital security
Creating a world leader in digital security Global cybersecurity players(1) Focused on faster growing segment(1) In $bn 4.3 4.2 3.2 Cybersecurity 2.9 $90bn 2.6 CAGR 7% - 9% 2.2 2.0 1.9 1.8 1.8 Digital security $26bn CAGR 8% - 10% Symantec TAG Idemia Deloitte IBM Cis co EY PWC Palo Alto McAfee + (OT-
Slide 15: Both Groups enabling the digital transformation of most demanding vertical markets
Both Groups enabling the digital transformation of most demanding vertical markets Utilities/critical infrastructures Defence Transport Telcos operators GAFAs Governments Healthcare Automotive Satellite operators Airports Banks/ financial services Thales and Gemalto create a world leader in digital
Slide 16: Supporting strategic ambition to become more global
Supporting strategic ambition to become more global 2016 geographical revenue breakdown 2016 geographical revenue breakdown (standalone) (combined pro forma(1)) Americas Americas €3.0bn EMEA €1.8bn EMEA €10.7bn €14.9bn €18.2bn €12.2bn Asia-Pacific Asia-Pacific €2.4bn €3.0bn Americas revenues: +70% A
Slide 17: Strong industrial and cultural fit: foundation for successful integration
Strong industrial and cultural fit: foundation for successful integration Common ‘DNA’ Deep roots in technology and passion for innovation and culture Product-focus Global organizations driven by product lines rather than geographies Innovation R&D-oriented innovation powerhouses combining more cham
Slide 18: Creation of a digital security Global Business Unit
Creation of a digital security Global Business Unit ▌ Gemalto well advanced in its transition from its historical businesses to faster-growing markets ▌ Thales to combine key digital assets with Gemalto in order to: Segment revenue breakdown(1) Strengthen common digital capabilities Transport 9% Acc
Slide 19: Favorable financial impacts
DRAFT – WORK IN PROGRESS Gemalto, a global player in digital security A highly complementary combination Favorable financial impacts Next steps
Slide 20: Acquisition further strengthens Thales's margin and growth profile
Acquisition further strengthens Thales’s margin and growth profile Revenues EBIT margin Market Growth potential Securing identities Payment cards ▌ Upon integration, Gemalto’s E-Payment margin in line with Thales’s expected profitability Government Securing Mobile ▌ Potential for margin exp
Slide 21: Solid cost synergies, with significant revenue synergies upside
Solid cost synergies, with significant revenue synergies upside ▌ Recurring pre-tax cost synergies of €100m to €150m by 2021 R&D and SG&A optimization on enterprise security SG&A savings on Gemalto perimeter Savings on purchasing Footprint optimization ▌ Significant revenue synergies Enlarged custom
Slide 22: Significant value creation for Thales shareholders
Significant value creation for Thales shareholders KEY TRANSACTION TERMS KEY FINANCIAL IMPACTS All-cash offer price Mid to high teens accretive at €51 per Gemalto share(1), implying a Impact on adjusted EPS(3) expected in first year post closing premium of 48% on 3M VWAP Implied EV of €5.6bn, repres
Slide 23: Disciplined financial policy, preserving solid investment grade rating
Disciplined financial policy, preserving solid investment grade rating Financing structure ▌ Solid investment grade profile Robust business profile of combination Available cash Disciplined financial policy reserves €4bn fully-committed ▌ Rapid deleveraging anticipated credit agreement ▌ Dividend po
Slide 24: Next steps
DRAFT – WORK IN PROGRESS Gemalto, a global player in digital security A highly complementary combination Favorable financial impacts Next steps
Slide 25: Next steps
Next steps ▌ Filing of the offer document with the AFM expected within 4 weeks ▌ Publication of offer memorandum shortly after approval by AFM + ▌ Expected closing in H2 2018 Upon completion of regulatory approvals and other customary closing conditions Thales and Gemalto create a world leader in di
Slide 26: Questions and answers
Questions and answers www.thalesgroup.com
Slide 27: Definition of non-GAAP measures and other remarks
Definition of non-GAAP measures and other remarks Rounding of amounts in euros In the context of this presentation, the amounts expressed in millions of euros are rounded to the nearest million. As a result, the sums of the rounded amounts may differ very slightly from the reported totals. All ratio
Slide 28: Thales – Tour Carpe Diem – 31 Place des Corolles – 92098 Paris La
DRAFT – WORK IN PROGRESS Thales – Tour Carpe Diem – 31 Place des Corolles – 92098 Paris La Défense – France www.thalesgroup.com This presentation may contain forward-looking statements. Such forward-looking statements are trends or objectives, as the case may be, and shall not be construed as consti