Smart card vendors Gemplus and Axalto agree to merge

Smart card vendors Gemplus and Axalto agree to merge

France's Gemplus has agreed to merge with competitor firm Axalto under a stock-for-stock deal that will create the world's largest smart card maker with combined 2005 revenues of EUR1.8 billion.

The companies say the merged business will be better placed to develop new markets and pursue high growth opportunities, such as identity, e-passport, healthcare, IT and corporate security and payments.

Gemplus shareholders will own 55.4% of the merged business, called Gemalto, with Axalto shareholders owning 44.6% of the share capital.

Under the deal, Gemplus shareholders will be offered two Axalto shares for every 25 of their own and will also receive an exceptional pay-out of EUR0.26 a share (at a total estimated cost to Axalto of EUR163 million) before the deal concludes. The two vendors also propose a share buyback, once the deal is closed, covering up to 10% of Gemalto shares.

The companies say shareholders representing 43.7% of Gemplus back the merger deal.

The merged company, which will be registered in the Netherlands, will employ 11,000 staff across operations in over 50 countries and will maintain operation centres in the Paris and Marseille areas. However, the companies say there will be "limited job reductions" in their R&D and manufacturing bases, but have not disclosed how many roles would be affected.

The pair expect joint annualised net operational savings of approximately EU85 million by the third year after closing, and a one-time restructuring cost of EUR43 million.

Alex Mandl, the President & CEO of Gemplus, will be executive chairman of the new merged company, while Axalto CEO Olivier Piou will become chief executive.

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