Published by Jessica Weisman-Pitts
Posted on February 4, 2022
By Julien Ponthus and Pamela Barbaglia
LONDON (Reuters) – Advent International is looking to sell its French biometrics and fingerprint identification firm IDEMIA in a deal worth up to $4.6 billion as it seeks to capitalise on growing demand for cybersecurity assets in Europe, two sources told Reuters.
The U.S. buyout fund is reviewing a series of options to sell IDEMIA, including a possible break-up of the company which was formed in 2016 by combining Safran’s identity and security business with Oberthur Technologies, the sources said.
The move comes as governments around the world have stepped up their data protection defences during the pandemic due to the increased threat of cyberattacks while companies are vying to provide identification services to their clients.
Cybercrime worldwide has jumped 600% during the pandemic, according to research published by Embroker, as hackers are upping their game and developing new malware to attack and infiltrate systems with the shift to remote working.
IDEMIA, which is also backed by Bpifrance, provides facial recognition and other biometric identification products as well as ID tools for border control, working closely with government agencies to verify travellers’ identity and avoid irregular immigration.
Advent has asked investment banks to pitch for a mandate as it wants to launch an auction process later this year, the first source said.
The sale, which is valued at 3 billion to 4 billion euros ($4.59 billion), has already drawn interest from France’s defence firm Thales which could only bid for parts of IDEMIA due to antitrust hurdles, the sources said.
Thales said this week that it was “potentially interested” in any cyber-security asset that could be up for sale, stressing it would not diversify beyond its three core businesses of aerospace, defence and digital identity and security.
Private equity firms are also keen to join the race for IDEMIA, which is based on the outskirts of Paris, but no deal or pre-emptive approach is expected to come before the French election in April, the sources said.
A spokesperson for Advent declined to comment.
Thales declined to comment.
BREAK-UP?
IDEMIA, which underwent a 2020 leadership change when Pierre Barrial stepped in as CEO, has benefited from the post-pandemic rebound but is still carrying a heavy debt load and its key credit metrics remain weak, according to rating agency Moody’s.
It reported core earnings of 360 million euros in 2020 and overall revenues of about 2 billion euros, the first source said.
To fetch the highest price Advent could carve out IDEMIA’s prized government business, valued at about 3 billion euros, and sell it separately from its enterprise operations which provide sim cards for mobile phones and payments platforms and could be worth about 1 billion euros, the sources said.
Thales is waiting in the wings as it wants to bulk on cybersecurity but would struggle to swallow IDEMIA’s enterprise assets due to the overlap in sim-card supply following its purchase of Dutch firm Gemalto in 2019, the first source said.
The French defence group, which is controlled by Dassault Aviation and the French state, has eyed a similar move for Atos’ cybersecurity business, known as BDS, but would need support from the government for any tie-up involving strategic defence interests or technology.
A 2018 French government study said consolidating the industrial base in cyber defence would be “advisable” to provide high security while ensuring companies were economically viable. ($1 = 0.8719 euros)
(Reporting by Julien Ponthus and Pamela Barbaglia, additional reporting by Tim Hepher; Editing by Kirsten Donovan)
By Julien Ponthus and Pamela Barbaglia
LONDON (Reuters) – Advent International is looking to sell its French biometrics and fingerprint identification firm IDEMIA in a deal worth up to $4.6 billion as it seeks to capitalise on growing demand for cybersecurity assets in Europe, two sources told Reuters.
The U.S. buyout fund is reviewing a series of options to sell IDEMIA, including a possible break-up of the company which was formed in 2016 by combining Safran’s identity and security business with Oberthur Technologies, the sources said.
The move comes as governments around the world have stepped up their data protection defences during the pandemic due to the increased threat of cyberattacks while companies are vying to provide identification services to their clients.
Cybercrime worldwide has jumped 600% during the pandemic, according to research published by Embroker, as hackers are upping their game and developing new malware to attack and infiltrate systems with the shift to remote working.
IDEMIA, which is also backed by Bpifrance, provides facial recognition and other biometric identification products as well as ID tools for border control, working closely with government agencies to verify travellers’ identity and avoid irregular immigration.
Advent has asked investment banks to pitch for a mandate as it wants to launch an auction process later this year, the first source said.
The sale, which is valued at 3 billion to 4 billion euros ($4.59 billion), has already drawn interest from France’s defence firm Thales which could only bid for parts of IDEMIA due to antitrust hurdles, the sources said.
Thales said this week that it was “potentially interested” in any cyber-security asset that could be up for sale, stressing it would not diversify beyond its three core businesses of aerospace, defence and digital identity and security.
Private equity firms are also keen to join the race for IDEMIA, which is based on the outskirts of Paris, but no deal or pre-emptive approach is expected to come before the French election in April, the sources said.
A spokesperson for Advent declined to comment.
Thales declined to comment.
BREAK-UP?
IDEMIA, which underwent a 2020 leadership change when Pierre Barrial stepped in as CEO, has benefited from the post-pandemic rebound but is still carrying a heavy debt load and its key credit metrics remain weak, according to rating agency Moody’s.
It reported core earnings of 360 million euros in 2020 and overall revenues of about 2 billion euros, the first source said.
To fetch the highest price Advent could carve out IDEMIA’s prized government business, valued at about 3 billion euros, and sell it separately from its enterprise operations which provide sim cards for mobile phones and payments platforms and could be worth about 1 billion euros, the sources said.
Thales is waiting in the wings as it wants to bulk on cybersecurity but would struggle to swallow IDEMIA’s enterprise assets due to the overlap in sim-card supply following its purchase of Dutch firm Gemalto in 2019, the first source said.
The French defence group, which is controlled by Dassault Aviation and the French state, has eyed a similar move for Atos’ cybersecurity business, known as BDS, but would need support from the government for any tie-up involving strategic defence interests or technology.
A 2018 French government study said consolidating the industrial base in cyber defence would be “advisable” to provide high security while ensuring companies were economically viable. ($1 = 0.8719 euros)
(Reporting by Julien Ponthus and Pamela Barbaglia, additional reporting by Tim Hepher; Editing by Kirsten Donovan)
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