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February 22, 2019updated 24 Feb 2019 7:36pm

nCipher Security Sold to Privately Held US Buyer

Thales now expects Gemalto acquisition to close by end-March 2019

By CBR Staff Writer

Thales has agreed to sell hardware security module (HSM) business nCipher Security to privately held US company Entrust Datacard for an undisclosed sum.

The closely-watched sale needs to be approved by the European Commission, US Department of Justice, as well as Australian and New Zealand regulators.

Minneapolis, Minnesota-based Entrust Datacard is a significant provider of Public Key Infrastructure (PKI) solutions — the primary use case for HSMs in protecting infrastructure private keys such as root and issuing Certification Authorities keys.

“This makes Entrust Datacard the ideal organization for Thales to divest this business, ensuring its leadership position in the GP HSMs market and providing trust, integrity and control to business-critical applications,” Thales said.

nCipher Security, originally founded in Cambridge, UK, by brothers Alex and Nicko van Someren was spun off by Thales this year under orders from regulators. (Thales had bought nCipher Security eleven years ago for £50.7 million.)

Its sale had been demanded by the European Commission ahead of the French aerospace and security company’s €4.8 billion all-cash acquisition of Holland’s Gemalto – which itself awaits final regulatory approvals.

See also: EU Demands Divestment as it Approves Thales’ €4.8 Billion Gemalto Takeover

Sources told Computer Business Review that regulators had taken a close interest in the sale, with US regulators keen to see a US buyer, and that there had been “robust” interest from a number of US players – “large and small”. A number of companies had been speculatively linked to the deal, including IBM.

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With the cryptography hardware industry being a small one and one in which HSMs often find themselves in sensitive networks, regulators had a notable say in who the company was sold to: there does not appear to have been a shortage of interest.

This transaction is expected to close during the second quarter of 2019. It addresses commitments made by Thales to several competition authorities to “divest this business to a suitable purchaser in order to ensure a strongly competitive market for GP HSM solutions and to finalize the acquisition of Gemalto”, Thales said.

nCipher Security Sold: Thales Now Expects Rapid Gemalto Approvals 

Todd Wilkinson, president and CEO of Entrust Datacard said in a statement published online this morning: “This acquisition is an excellent complement to our expertise in both cryptography and hardware and will extend our ability to meet the evolving security needs of our customers globally while allowing us to accelerate our own growth.”

nCipher security sold

Some of nCipher Security’s HSMs

“The Thales General Purpose HSM solution, known as nCipher Security, has a strong market position, brings with it exceptional internal talent and offers us the ability to develop even more comprehensive solutions for our clients.”

Philippe Keryer, Executive VP, Strategy, Research and Technology at Thales, added: “This announcement marks a key step in the ongoing process regarding the acquisition of Gemalto which we expect to close by end March 2019.”

“We are convinced that nCipher Security will strongly leverage the expertise of Entrust Datacard, an organization focused on their competencies in the development of safe and secure access to information, applications and networks as well as its global presence specifically in Europe and in North America.”

nCipher Security employs approximately 330 staff. Its HSMs are hardened, tamper-resistant hardware environments for secure cryptographic processing, key generation and protection, encryption and more. Notable customers include Microsoft and Samsung. HSMs are used to to provide a root of trust for a wide variety of business applications including public key infrastructures (PKIs), SSL/TLS encryption key protection, code signing and digital signing.

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