January 17, 2006

Oberthur Card Systems (Paris) says it may challenge the proposed merger between its smart card rivals Axalto and Gemplus.

Oberthur dismissed the notion of putting a counter-offer on the table for Gemplus, preferring other means for disrupting the Axalto/Gemplus marriage, according to a report in Les Echos, a French business daily. The company says it may bring its case to the French financial regulator Autorite des Marches Financiers (AMF).

Gemplus (Luxembourg) agreed to merge with its competitor Axalto (Amsterdam) in December to create a firm called Gemalto. This would be the world's largest smart card maker with a 40 percent share of the global market in digital security cards.

In light of this, Oberthur is considering having the AMF intervene, along with the shareholder activist group Association pour la Defense des Actionnaires Minoritaires to examine the implications of the merger for minority shareholders of the two firms. Another option for Oberthur is to lobby the European Commission about the consequences for competition in the supply of digital security and bank cards if the merger proceeds.