Change of dimension in cybersecurity for Thales. This, via the acquisition of Imperva, one of the American champions of the sector whose name sums up the mission. Imperva is derived from the Latin “impervius”, meaning “impenetrable”…
The defense and high technology group announced on Tuesday that it had reached an agreement with the investment fund Thoma Bravo to buy back 100% of the capital of Imperva, for 3.4 billion dollars (50% in cash and 50% through a bond issue). Once the operation is completed, in early 2024, Thales will become a “world-class” leader in cybersecurity, integrating the international top 5, with 2.4 billion in turnover, against 1.5 billion previously, and 8,000 employees, including 5,800 cyber experts.
Operation Ipanema, its code name, was launched a year ago. “ It all started with discussions between the management of Imperva and that of our civil cyber activities, relating to cross-trade agreements. The idea gradually emerged to go further in order to exploit the full potential of a friendly rapprochement of our activities, “says Patrice Caine, CEO of Thales, to Figaro. During last autumn, the discussions entered an active phase, under the supervision of Philippe Keryer, director of strategy at Thales. The French group then makes an offer which is well received by Thoma Bravo. This opens a phase of “due diligence” (verification of the books of accounts, editor’s note) and “co-construction, with the management of Imperva, of the development plan”. “Thoma Bravo, who was not considering the sale of Imperva, bought in 2019, before 2024, accepted, if we agreed on the valuation, to carry out an over-the-counter transaction”, specifies Patrice Caine. From then on, the operation was completed in less than three months.
It now remains to obtain the green light from the competition authorities as well as from Cifus, the Committee on Foreign Investments in the United States. In this regard, Thales, which has been advised by Morgan Stanley and Centerview Partners, “ does not anticipate any particular difficulties”. In particular, a green light under “proxy agreement”, that is to say with in particular the obligation to have American administrators chosen by Washington. “ Thales is a well-known and respected company in the United States, where we have long had a proxy company, which participates in confidential defense programs,” explains Patrice Caine. In addition, Imperva (500 million in revenue and 1,400 employees) operates only in the civilian cyber market.
The choice of Imperva was obvious because it is a “rare and quality” asset, in a very fragmented market, valued at 136 billion in 2022 and 267 billion in 2026 by Accenture and the Gartner Group. The Californian company, created in 2002, has double-digit growth potential and strong profitability (Ebit) of around 20%. Imperva brings complementary activities to those of Thales, in the field of the security of applications on the web (firewalls in particular), solutions against denials of service and malicious “bots”, these programs which carry out attacks.
Thales’ civil cyber business specializes in software and encryption, encryption keys and security modules. Imperva brings its engineering centers in the United States (58% of its sales), Canada, India and Israel and a portfolio of 6,000 major customers in 180 countries. This complementarity should generate $110 million in recurring synergies from 2028.
Once the acquisition is complete, Imperva will be integrated into Thales’ Identity and Security (DIS) division, which will oversee all civil cyber activities. DIS must indeed also integrate the Australian cyber nugget Tesserent, the acquisition of which was announced in mid-June. In 2024, Thales plans to transfer to DIS its 11 cyber supervision centers (active monitoring, identification of hacker signatures, security tests and solutions to counter cyberattacks, etc.), currently housed in its defense and security division. On the other hand, cyber military activities will remain in the defense branch.
The acquisition of Imperva comes in a growing market, due to the explosion of cyber threats in our increasingly connected societies. And whose global cost will be around 10 trillion dollars in the coming years, according to McKinsey. But also in a market in full consolidation. In 2022, Google bought Mandiant for 5.4 billion, Datto fell into the hands of Kaseya for 6.2 billion and Thoma Bravo built up a portfolio of cyber assets, buying SailPoint and ForgeRock among others. “This consolidation is inevitable in a cybersecurity market where fragmentation is a problem (…). Nearly every customer I’ve spoken to has an average of 30-50 cybersecurity vendors,” said Nikesh Arora, CEO of Palo Alto Networks, the world’s leading cyber vendor, in late 2022. The same goes for Thales. “Our clients who are responsible for information systems face a proliferation of solutions and are looking for global solutions. This is what we are going to offer them with an integrated offer of cyber solutions”, adds Patrice Caine.
The acquisition of Imperva is Thales’ most important strategic move since the acquisition of the former Gemalto for 4.8 billion euros in 2019. Since 2014, the group has patiently built, from Vormetric in the United States to young European shooters S21Sec, Excellium and OneWelcome via Tesserent, a strike force in cyber, where Thales weighed some 350 million in sales. In ten years, cyber activity has gained strength with 9 acquisitions, including Imperva.
At the same time, Thales has also strengthened its position in aeronautics, with the planned acquisition of Cobham Aerospace communications and defense, with the acquisition of the Swiss Ruag forces training activities. While selling assets such as railway signaling (closing is expected at the end of 2023). “It is a source of pride and our hallmark: we are continuously improving the quality of Thales’ business portfolio. This is undoubtedly what distinguishes us from other groups,” concludes Patrice Caine. So, once Imperva and Cobham are integrated, we can expect further moves from Thales…
