Shares in Gemalto plummeted after the European smart card vendor launched a cash bid for French wireless technology outfit Wavecom.
Gemalto stock took a hammering - falling 18% to a day low of EUR 21.32, before rallying to EUR23.15 in mid afternoon trading - after the vendor said it was offering EUR7 per share for Wavecom. Investors took flight as market observers reacted against the deal, which carries a hefty premium and offers no obvious synergies for the core business.
The offer represents a 72% premium over the closing price of Wavecom shares on Friday and a 50% premium over the volume weighted average share price in the preceding three months. The bid is conditional upon Gemalto holding at least 50.01% at the end of the offer period.
Founded in 1993 and headquartered near Paris Wavecom provides embedded wireless technology for machine-to-machine (M2M) communication.
Describing the acquisition as having "low integration risk" Gemalto says Wavecom is a "natural extension" to its core business that will enable it to expand in the M2M communication market.
"Machine to machine is an attractive and growing market, with the opportunity to connect billions of devices, and Wavecom is at the forefront of this industry," says Gemalto CEO Olivier Piou. "Gemalto will provide Wavecom with the scale and resources to capture the full growth potential of M2M."
Piou told reporters that the bid was not hostile as Gemalto had been in talks with Wavecom for several months. But he said Gemalto decided to push ahead with an offer after the two parties failed to agree on timing.