Thales to acquire Australia’s largest listed cybersecurity company Tesserent for $176m

Australia’s largest listed cyber security company Tesserent (ASX: TNT) has been approached by French defence company Thales in a proposed takeover by way of a court-approved scheme of arrangement.

Under the terms of the deal, Thales Australia will offer Tesserent shareholders $0.13 per share in cash, representing a premium of 165.3% to the last closing price of $0.049 per share and a 157.4% increase on the one-month volume weighted average price (VWAP) of $0.0505 per share.

The acquisition provides Tesserent with an implied equity value of approximately $176 million.

Thales will self-fund the transaction from its internal resources and cash reserves, which sat at $7.98 billion at end December.

On completion, Tesserent’s visual identity will incorporate the tagline “Cyber Solutions by Thales” and it will be marketed as the lead cybersecurity offering of Thales Australia and New Zealand.

Thales is already a major player in cybersecurity and generated sales of $2.4 billion last year in that segment.

In Australia, the Paris-listed company employs around 3800 staff across all its divisions.

Attractive premium

Tesserent chairman Geoff Lord recommended shareholders vote in favour of the scheme of arrangement due to its attractive premium, certainty of value and limited conditions.

“ represents a significant premium to Tesserent’s recent share price, it reflects an enterprise value of $232 million which is up 35 times from $6.6 million in 2019 and it provides an opportunity for our shareholders to realise their investment in full for cash,” he said.

“Our staff are expected to have opportunities to develop new skillsets and access to new networks including international mobility to advance and grow their careers our customers will benefit from Thales’ enhanced product suite, global service capabilities and the acceleration of existing growth and customer service strategy.”

Mr Lord said Tesserent’s directors intend to vote in favour, with their shares representing 8.98% of the company’s total shares on issue.

Cybersecurity development

Thales Australia chief executive officer Jeff Connolly said the acquisition would enable the company to accelerate its cybersecurity development roadmap and expand its footprint in Australia and New Zealand.

“Tesserent’s highly-skilled team of cyber experts combined with our own system engineering experts will see us establish a regional leader in cyber defence which is able to best protect the country and its national infrastructure from cyber threats,” he said.

“The Tesserent team will have access to global expertise and a strong balance sheet to provide local businesses with a sophisticated and wide cybersecurity offering in a fragmented market.”

Tesserent has retained Deloitte as its financial adviser for the deal and MinterEllison as legal adviser, while Thales is using Azure Capital as financial adviser and Herbert Smith Freehills as legal adviser.