Digital security firms to merge

Axalto and Gemplus International, two digital security providers specializing in smart cards, are planning to merge into a new company, to be called Gemalto. The combined firm will have estimated fiscal 2005 revenues of $2.1 billion, and about 11,000 employees.

Its major centers of operation will be Paris and Marseille, France.

Axalto was initially formed as a unit of Schlumberger in 2003, specializing in smart cards and terminals, with a significant U.S. government thrust. The division introduced its stock offering in 2004, separating from its parent.

Axalto and Gemplus believe that Gemalto will be in a strong position to capture future growth. The combined research and development, and sales and marketing efforts are expected to create a strong platform from which to pursue opportunities in markets including identity management, electronic passports, health care.

"This transaction is an important development for Gemplus, Axalto and the digital security industry as a whole," said Alex Mandl, president and chief executive officer of Gemplus, in a prepared statement.

The merger will be accomplished through exchanges of shares.

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