French defense electronics provider Thales (TCFP.PA) has announced its plan to acquire US cybersecurity company Imperva in a strategic move worth $3.6 billion. The acquisition signals Thales’ commitment to expanding its digital identity and security (DIS) division and gaining a larger market share in the United States.
Nicolas Arpagian, Vice-President of cyber consulting firm HeadMind Partners, noted the importance of smooth integration due to the dynamic nature of software.
“Now, there’s the whole question of integration: software is a living product, you need well-trained people to steer it, drive it and constantly adapt it,” he said.
However, the announcement impacted Thales’ stock, causing a nearly 2% drop in early trading. Despite this, Thales defended the purchase price, explaining that it was paying 6.1 times sales for a business that had been acquired at a multiple of five times while making it profitable at the same time.
Thales anticipates the acquisition to generate around $110 million in pretax synergies, including $60 million linked to revenue opportunities and $50 million in cost savings. The deal with buyout firm Thoma Bravo implies an enterprise value of 17 times the 2024 operating earnings forecasts.
The combined business is projected to generate revenues of 4.5 billion euros in 2024, continuing to rise in years to come.
Thales CEO, Patrice Caine, expressed confidence in the valuation and stressed the deal’s significance in strengthening its position in the civil cybersecurity sector.
“This really changes our scale in civil cybersecurity,” he said.
The move comes amidst growing concern over cyberattacks as the entire world sees an increased scale of data breaches and cybersecurity incidents, with examples like the recent MOVEit file transfer service being a global incident. This acquisition positions Thales to better address these cybersecurity challenges and offer advanced solutions.
The deal is set to close in 2024, but it’s subject to approvals.