France’s Thales to buy Imperva in $3.6 billion cybersecurity deal

By Tim Hepher and Mathieu Rosemain

PARIS (Reuters) – France’s Thales said on Tuesday it would buy U.S. cybersecurity company Imperva in a deal worth $3.6 billion as it steps up expansion outside its historic defence business in the war against bots and hackers.

Thales’ move signals the group is ready to spend large sums to beef up its digital identity and security (DIS) division and take market share in the United States, where Imperva serves some of the biggest companies.

Thales said the price of the acquisition from buyout firm Thoma Bravo implied an enterprise value of 17 times 2024 operating earnings forecasts.

“It’s a significant amount,” said Nicolas Arpagian, vice-president at cyberconsulting firm HeadMind Partners, adding it was unusual to see a large French corporation buy such an asset from a private equity firm.

“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.”

Shares in Europe’s largest defence electronics provider, which also makes civil aircraft parts and digital security systems, fell almost 2% in early trading and were down by 0.4% at 1035 GMT.

Thales said buying Imperva would generate around $110 million of pretax synergies, including $50 million of cost savings and $60 million linked to revenue opportunities.

The combined business would have proforma revenues of 4.5 billion euros in 2024, rising to 5.4-5.5 billion in 2027.

Thales defended the purchase price, saying it was paying 6.1 times sales for a business that Thoma Bravo had bought at a multiple of five times while in the meantime making it profitable.

Those valuations had more recently been closer to 7-8 times sales after soaring as high as 18-20 times during a market bubble at the end of last decade.

“We are very comfortable with the level of valuation that we put on the table,” CEO Patrice Caine told reporters.

“This really changes our scale in civil cybersecurity,” he told analysts.

Cyberattacks have become the top worry for global corporate executives, according to a recent survey by PwC. France last year opened a dedicated campus outside Paris to tackle hacking.

Thales said the deal would deliver a medium-term boost to its earnings per share and add close to $500 million in revenue.

Talks with Thoma Bravo, which has built a large portfolio of cybersecurity assets, started in the first quarter and accelerated over the last three months, two sources close to the matter said.

The acquisition is Thales’ biggest since it bought digital identity company Gemalto (AS:) in 2019 for $5.6 billion.

Thales said the deal would close in 2024 subject to approvals, and did not anticipate significant hurdles.

Morgan Stanley (NYSE:) and Centerview Partners acted as financial advisers to Thales.

(This story has been refiled to correct the spelling of Thoma Bravo in paragraphs 3, 9 and 15)