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French multinational Thales has struck a deal to buy Melbourne-headquartered cyber security firm Tesserent (ASX: TNT) for an equity value of $176 million.
The two parties have entered a binding scheme implementation deed (SID) for a purchase price of 13cps - a level similar to TNT's trading price at the start of the year but at a 165.3 per cent premium to the closing price on Friday.
The Tesserent board unanimously recommends shareholders vote in favour of the deal at an anticipated meeting in September.
Tesserent's share price has languished in the year to date despite the prevalence of high-profile cyber security cases involving companies such as Latitude Group (ASX: LFS) and Medibank (ASX: MPL).
The group's revenue was up 14 per cent year-on-year in the third quarter at $47.5 million, although EBITDA was flat due to the margin impact of continued underperformance of its security operations centre (SOC), which is undergoing a transformation with a refreshed offering that saw six new enterprise clients sign up to the managed service in the March quarter.
In the first half, the company ran at a net loss after tax of $1.1 million, although this was partly due to costs and integrations associated with its acquisitions of Loop Secure, Claricent and Pearson. Normalised EBITDA for the December half stood at $6.6 million.
If the acquisition goes ahead, the buyer plans to keep the Tesserent name for the business but its visual identity will incorporate the “Cyber Solutions by Thales” tagline as its lead cyber security offering for Thales Australia and New Zealand.
"Recognising the importance of the Australian market to Thales and the trust placed in us by the highest levels of government and our corporate clientele, Tesserent represents a highly complementary addition to our global cybersecurity platform," says Thales Australia CEO Jeff Connolly.
"We are excited by the combination, especially given our collective alignment to advising multiple levels of government, including national defence and clients with critical infrastructure.
"We are committed to growing the business and are confident it will be a great opportunity to further grow Tesserent’s business and people."
Tesserent chairman Geoff Lord claims the scheme represents a "significant premium" to the company's recent share price, reflecting an enterprise value of $232 million - up 35 times from $6.6 million at the end of 2019.
"Furthermore, the share scheme enhances outcomes for our customers, suppliers, and staff," Lord says.
"Tesserent’s customers are expected to benefit from Thales’ enhanced product suite, global service capabilities and the acceleration of Tesserent’s existing growth and customer service strategy.
"As a result of the share scheme, Tesserent staff are further expected to have increased opportunities to develop new skillsets and access to new networks including international mobility to further advance and grow their careers."
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