French aerospace contractor Thales Group Sunday said it will acquire the digital security startup Gemalto NV in an all-cash deal worth $5.6 billion.

The move comes just days after information technology services firm Atos Corp. saw a $5.1 billion offer for the company rejected. The offer, which has been unanimously approved by Gemalto’s board of directors, is a 57 percent premium on the firm’s valuation as of Dec. 8.

Gemalto is a digital security firm that produces SIM cards and Near Field Communications technology for mobile phones. In addition, the company builds secure transaction platforms for banks, such as EMV chip cards, user authentication systems and payment terminals. The company also creates biometric security technologies for passports and other government-issued documents.

Gemalto also provides encryption and cloud security services for enterprises, as well as connectivity, monetization and security services for the “internet of things.”

As for Thales, the company’s main focus is in the aerospace, defense, space and transportation sectors. However, it also has a security technology business, providing systems for airports as well as cryptographic security for data.

Thales has actually spent a lot of time and money expanding its digital security offerings in recent years, investing over $1 billion into areas such as artificial intelligence, connectivity, cybersecurity and data analytics, acquiring companies including Guavus Inc., Sysgo AG and Vormetric Inc. The acquisition of Gemalto “strongly accelerates” this strategy, Thales said, beefing up its security offerings across five verticals.

Thales said the deal will secure it valuable “technologies and competencies” in these markets, and will also add more than $3 billion in annual revenues.

When the deal is done, Thales will merge its own enterprise security business with Gemalto’s, which will keep its own brand name. The new business unit will become Thale’s seventh overall, and will led by Gemalto Chief Executive Officer Philippe Vallée.

Thales said it doesn’t anticipate any layoffs among Gemalto’s workforce. Instead, the combined businesses will work to become a “global leader” in digital security, Thales Chairman and CEO Patrice Caine said.

“Security remains a top concern in the digital age, and the table is just being set,” said Holger Mueller, vice president and principal analyst at Constellation Research Inc. “More players want to be at the table and it is notable to see how Thales is positioning itself for these changes ahead. Keeping the Gemalto brand is a smart move that should help in the transition.”

But Mueller said it remains to be seen if this will be mainly additional revenue or a synergy play for Thales — or perhaps both.

The deal, still subject to shareholder and regulatory approval, is scheduled to close during the second half of 2018.

Image: Thales