Thales to boost cybersecurity with Tesserent acquisition

European defense and security original equipment manufacturer Thales has proposed the proposed acquisition of Tesserent, one of Australia and New Zealand’s largest cyber security companies, with the latter achieving calendar year 2022 turnover of A$185m (A$125.8m .$).

With approximately 500 employees across nine offices in Australia and New Zealand, Tesserent provides cybersecurity consulting for government and defense clients, providing solutions and services to mid-sized and enterprise-level organizations.

According to a release from Thales on June 13, the acquisition will allow the company to accelerate its cybersecurity development roadmap and expand its footprint in Australia and New Zealand. In 2022 alone, Thales had $1.6 billion in cybersecurity sales.

The proposed acquisition has been unanimously recommended by Tesserent’s board of directors, Thales said, which is now subject to approval by Tesserent shareholders and other conditions.

The combination of Thales and Tesserent will create an experienced provider of much-needed cyber security services in Australia and New Zealand at a time when the market is expecting double-digit growth through 2026, Thales said in a statement.

The Tesserent business will continue to be known as Tesserent and its visual identity will incorporate the tagline “Cyber ​​Solutions by Thales”. It will become Thales Australia and New Zealand’s flagship cyber security offering.

The deal is expected to close in the second half of 2023.

James Marques, an aerospace, defense and security analyst at GlobalData, said there was “a lot of appetite” for French companies to continue operating in the Australasia region, despite Canberra very publicly snubbing French industry for sourcing a new generation submarines for the Royal Australian Navy.

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“Thales is active in almost all parts of the cybersecurity service chain. They do risk assessment, training, detection and response and already have a strong presence in Australia – which is probably feeling pressure to improve security as competition with China increases,” Marques said.

Growing cybersecurity market as threats proliferate

Given the growing array of sensors and other data streams required to operate in the modern battlefield, there is an increasing number of devices that need to be cyber-secure.

According to GlobalData’s Cyber ​​Security in Defense – Thematic Research report, published in June 2022, the industry sees increasing threats of cyberattacks, increasing in line with the increase in connectivity between physical and digital systems. Lower barriers to entry for cyber threat actors, more aggressive attack methods, a lack of cyber professionals, and patchwork governance mechanisms have exacerbated the risk for companies and organizations operating in the defense space.

The report states that cybersecurity has become a key issue to consider for all sectors, however, the sensitive nature of defense data and the resulting national security concerns increase the importance of data security for defense manufacturers. Cybersecurity for militaries and states is a matter of national security because a successful attack could mean threat actors gain the ability to control and use destructive weapons or critical national infrastructure is weakened.

Releasing its forecast, GlobalData said global security revenue led strong growth in the first half of the 2020s, reaching $198 billion by 2025. The strongest growth will be seen in software, which will record compound annual CAGR of 13% between 2020 and 2025, rising from $52.1 billion in 2020 to $96.5 billion in 2025.

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Over the same period, hardware revenue will grow from $26.5 billion to $40.7 billion, a CAGR of 10%. Services will register the smallest CAGR of 5%, growing from $47.9 billion in 2020 to $60.7 billion in 2025.

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