France appears to have finally prioritized cybersecurity, which is fast becoming a central pillar of national security, with French defense giant Thales’ recent acquisition of US cybersecurity company Imperva for $3.6 billion. The deal may also be a sign that France is relinquishing its ambitions to create rival technologies to Silicon Valley, instead pursuing a strategy of purchasing US technology and expertise.
“With this acquisition, we are seizing a unique opportunity to accelerate our cybersecurity capabilities and are taking an important step towards our ambition to build a world-class global cybersecurity integrated player, providing a comprehensive portfolio of products and services. We have tremendous respect for Imperva’s innovative application and data security offerings,” said Thales chairman and CEO Patrice Caine.
Thales is using the acquisition to boost its digital identity and security (DIS) division and gain a share in the United States cybersecurity market, where Imperva has large corporate clients. In doing so, it is taking France’s digital strategy in a very different direction from the original plan envisaged by French President Emmanuel Macron, who consistently endorsed French alternatives to major American players. His repeated public backing of search engine Qwant over US search giant Google is perhaps the most prominent example.
Increasing uncertainty over the future of Silicon Valley and its prized startups is leading to a further revaluation of business approaches. Opportunistic companies, governments, and sometimes a combination of the two are circling like predators above Northern California, looking for weaknesses and plummeting valuations enabling cost-effective acquisitions.
Thales said the price of the purchase of Imperva from buyout firm Thoma Bravo implied an enterprise value of 17 times 2024 operating earnings forecasts, whereas, according to Investing.com, the estimated average market P/E ratio is 20-25 times earnings. Thales said it is paying 6.1 times sales for a business that Thoma Bravo had bought at a multiple of five times and that buying Imperva will generate around $110 million of pretax synergies, including $50 million of cost savings and $60 million linked to revenue opportunities.
The deal is expected to be closed in 2024, subject to approvals. Imperva is Thales’ largest acquisition since it bought digital identity company Gemalto in 2019 for $5.6 billion. Morgan Stanley and Centerview Partners acted as financial advisers to Thales.
