Thales, the defense electronics provider based in Europe is venturing into the field of cybersecurity through the acquisition of Imperva, a U.S. Company for a $3.6 billion. This strategic decision intends to strengthen their activities in cybersecurity expand their focus beyond defense operations and establish themselves as a global contender, in the realm of cyber warfare. The completion of this deal is expected by 2024.
Thales, the largest defense electronics provider in Europe, announced a major move in the battle against cyber threats by acquiring the U.S. cybersecurity company Imperva for $3.6 billion. This strategic step marks a significant shift away from Thales’ traditional defense business.
The deal, facilitated by software investor company Thoma Bravo, is expected to boost Thales’ earnings per share in the medium term and add approximately $500 million in revenue. However, the announcement caused a slight dip of about 1.5% in Thales’ shares during early trading.
Thales’ Chief Executive, Patrice Caine, emphasized the importance of this acquisition, stating that it offers a rare opportunity to become a leading global player in the field of civil cybersecurity. The move comes as cyberattacks have become a top concern for corporate executives worldwide, according to a recent PwC survey. In response to this growing threat, France had previously established a dedicated campus near Paris to address hacking issues.
The price of the deal implies an enterprise value of 17 times the 2024 operating earnings. Thales anticipates generating approximately $110 million in pretax synergies from the acquisition, comprising $50 million in cost savings and $60 million related to revenue opportunities. The financing for the deal will involve a combination of cash and new debt.
Analysts from Jefferies noted that the multiples in this deal are substantial for the aerospace & defense industry, but they are more in line with typical valuations for the cybersecurity sector.
The acquisition of Imperva is a pivotal moment for Thales, marking the company’s most significant expansion since its acquisition of digital identity company Gemalto for $5.6 billion in 2019. The company’s primary focus will now be on integrating the newly acquired businesses of Imperva and Cobham Aerospace Communications, with whom talks for a $1.1 billion deal were recently announced. Thales remains open to further “bolt-on” acquisitions within its core business in the future.
Under the leadership of CEO Patrice Caine, Thales has been actively growing its civil cybersecurity activities to diversify beyond its traditional defence ventures. The company aspires to become the market leader in Europe, competing with firms like Orange Cyberdefense and Atos.
The deal with Imperva is expected to be finalized in 2024, subject to necessary approvals, with no significant obstacles anticipated. Thales received financial advice for the transaction from CenterView and Morgan Stanley.
