A major global acquisition will have a sizable impact in Ottawa, as French multinational Thales Group completed its $7.3-billion acquisition of Netherlands-based digital security firm Gemalto earlier this week.
The deal immediately brings Thales’ annual revenues up roughly 20 per cent to $29 billion with an enormous workforce of 80,000 employees spread across 68 countries. Roughly 2,000 of those workers are now in Canada.
In Ottawa, where the multi-faceted company’s work largely revolves around the defence and security sector, Thales will add 250 Gemalto employees to its existing workforce of roughly 200.
Mark Halinaty, Thales Canada’s president and CEO, tells OBJ that the addition of Gemalto advances the company’s “digital transformation” efforts. He says that while Thales operates in numerous sectors from defence to transportation to aerospace, Gemalto’s specialization in identity authentication and data security augments the parent company’s offerings across its portfolio.
As industry increasingly moves towards digital and connected solutions, the demand for secure solutions has become paramount for Thales’s customers.
“They all are dependent on connectivity, and more and more, as technology evolves, that connectivity requires security,” Halinaty says.
The acquisition gives Thales a global workforce of 28,000 engineers and 3,000 researchers. The group says in a release these employees will be outfitted with an annual R&D budget of $1.5 billion, $40 million of which will be allocated to Canadian operations.
Halinaty highlights the combined company’s R&D capabilities as a strength of the merger. Thales already works with four other multinationals and the provincial and federal governments through the ENCQOR program, a five-year, $400-million R&D project focused on developing 5G connectivity technology in the Ontario-Quebec corridor. Halinaty notes that the addition of Gemalto could bring greater returns on this research.
Depth in naval operations
While Thales’ local operations touch numerous aspects of the defence industry, the vast majority of its work in Ottawa focused on naval contracts with the Canadian government and its partner Seaspan Shipyards in Vancouver. Thales is in charge of electronic system integration on Canadian Coast Guard ships as well as Canada’s Joint Support Ships, and two years ago announced it had won the $800-million in-service support contract for the JSS and Arctic-Offshore Patrol Ships. That deal came with options to extend the contract an additional 35 years, potentially bringing the full value up to $5.2 billion.
Halinaty says the company is in the midst of adding some 40 to 50 employees to its existing operations to support the ISS contracts, estimates roughly in line with what the company announced in 2017.
After doubling its Ottawa footprint overnight, Halinaty adds that the company is looking at ways for the disparate Thales and Gemalto offices in the capital to work together on new solutions. In the coming years the firm also intends to unite the 500-plus employees under one roof.
“That's where we want to head, is not just operating two independent facilities in Ottawa, but really looking at how those teams can work together,” Halinaty says.