Thales’s Acquisition of Imperva
Background
In late July of 2023, Thales announced their plans for the acquisition of Imperva with the goal of becoming a global leader in cybersecurity. Thales is a public company with the mission of a secure future through investments in artificial intelligence, cybersecurity, and quantum technology. They primarily operate in the markets of defense and security, aerospace and space, digital identity and security, and transport, providing services that enable companies and governments to carry out their operations securely. Imperva is a privately owned company that focuses solely on supplying cybersecurity to enterprise data and application software. They provide security in over 10 different industries and operate in over 100 countries. Imperva was a public company before they were acquired by private equity firm Thoma Bravo in 2019 in a $2.1 billion transaction.
Deal Specifics and Rationale
The all-cash acquisition closed in early December of 2023 and was valued based on an enterprise value of $3.6 billion. The acquisition was completed earlier than expected, showcasing Thale’s urgency in growing its cybersecurity sector. Thales’s goal with the acquisition was to substantially broaden their addressable market, a strategic move for them. It was a win-win as both companies offer unique services that bode well together. On one hand, Thales offers great encryption platforms that protect data in use, at rest, or in motion. On the other hand, Imperva is great at providing companies with visibility of their data, showing them where their data is, who has access to it, and how it’s being used. By combining the two, they create a great single digital framework. Imperva now marks Thales’s 9th acquisition in the digital security industry in the last 9 years and is the 2nd biggest one after Gemalto. The cybersecurity sector is growing at an unprecedented pace, motivating Thales’s expansion. As the world continuously becomes more dependent on technology, the importance of cybersecurity will continue to grow. It’s important to constantly improve digital security as malicious attackers and software will continue to find new ways to break through. It’s clear that Thales has recognized this as they’re making smart moves that enable them to be a major player within the cybersecurity market. Through acquiring Imperva, Thales is aiming to have a big impact on 3 sectors: Application security, data security, and identity & access management. Application security involves comprehensive protection for every application and API in the cloud, which is of large importance going forward as the dependence on cloud-based applications increases. This acquisition will allow them to differentiate themselves from many major players that have older business models that don’t protect cloud-based applications. As far as data security goes, they aim to provide protection and control of access to sensitive data anywhere. With identity & access management, they’re providing a seamless experience for customers accessing applications and digital services. This acquisition also enabled Thales to expand geographically and acqui-hire, allowing them to internally hire from Imperva rather than outsourcing for new cybersecurity experts. They now have over 5,800 cybersecurity experts across 68 countries.
The Future
By upgrading their cybersecurity sector through the acquisition of Imperva, they’re not only able to make an impact on the futures of their clients but also make a large impact on the businesses futures. It is expected that this acquisition will generate an additional $2.6 billion in revenue in 2024 with double-digit growth thereafter. Thales also expects EBIT margins in 2027 to reach 16.5% with organic sales to grow 6% to 7% from 2024–2027. This deal created significant value for the shareholders of Thales as they will have $110 million in run rate cost and revenue synergies and can expect significant adjusted EPS accretion. Going forward, the focus will be on the integration of Imperva into Thales, which once completed, will position the cybersecurity business as one of the top 5 global leaders. We can expect the integration to be smooth as Imperva’s overarching business model fits right into Thales cybersecurity sector. In addition, Thales has over 20,000 patents in its portfolio with more than 50% of these technologies related to AI, generative artificial intelligence, cybersecurity, big data, the cloud, augmented reality, and quantum technologies. We can expect Thales to continue being an innovator through the use of these technologies and remain as one of the top 5 global leaders within cybersecurity.
Concluding Thoughts
To deduce, this acquisition is one that I believe will be very beneficial to Thales. It seems that Thales has done their research and is confident in reaching their projections. This acquisition brought them many immediate benefits: An expanded employee base, increased access to a growing market, geographic expansion, and experience within the cybersecurity sector that they otherwise wouldn’t have. By combining these two companies, we can expect to see significant growth. Though this acquisition has high projected advantages, only time will tell how it will perform.
