nCipher Security looks forward to 'great synergies' with Entrust Datacard as Thales Group agrees to divest

nCipher Security has told the Cambridge Independent that it sees “great synergies” with its expected new owner, US-based multinational Entrust Datacard.

The Cambridge-based technology company, which provides encryption keys to secure data and transactions, has been operating as a standalone company within Thales Group after being carved out in January.

Thales is required to divest the business to a suitable purchaser as part of its commitment to competition authorities - including the European Union and US Department of Justice - in order for it to complete its 4.8billion euro acquisition of Dutch security firm Gemalto.

It was felt that combining two companies with significant general purpose hardware security module (HSM) businesses would be anti-competitive.

Now Thales has signed a definitive agreement to sell nCipher to Entrust Datacard, which provides trusted identity and secure transaction technologies.

The deal is expected to close during the second quarter of 2019, subject to regulatory approval and the successful completion of the Gemalto deal.

Speaking to the Cambridge Independent from his base in the San Francisco Bay Area, Peter Galvin, chief strategy officer at nCipher, said: “We are very excited about that. We believe there are a lot of synergies between the two companies in the marketplace.

“Entrust Datacard is very well known in the payments and payment issuing business.

“They are very strong at being able to provide public key infrastructure capabilities and are focused on providing Internet of Things solutions into the marketplace.”

The move would bring together two big players in the sector.

nCipher recorded more than €100m in revenues in 2018 and has more than 300 employees, including 160 at One Station Square in Cambridge, the company’s research and engineering hub.

Entrust Datacard has more than 2,200 employees in 34 locations worldwide, and customers in 150 countries. Headquartered in Minneapolis, Minnesota, its annual revenue exceeds €500m.

“We bring to the Entrust Datacard company a very strong R&D facility in Cambridge,” said Peter. “We are committed to Cambridge. We have moved all of our engineering and development for nCipher Security to our Cambridge office and we continue to invest in that.

“We believe Cambridge offers us a very strong ability to continue to innovate and develop our products and technologies because of the culture there and the university structure, and large number of people with technical backgrounds.

“We also have people in the US, and our headquarters are in Florida, and a regional office in Hong Kong.”

nCipher’s crytographic expertise helps to secure cloud, IoT, blockchain and digital payments technologies. Among the core areas of its business is helping companies stay compliant with data laws such as GDPR.

“The way you protect citizens’ data is with encryption and tokenisation technology and we help do that by protecting the keys, and then in the identity and authentication of a person or a machine, which is where nCipher has very strong capabilities,” said Peter.

He said the combined companies would be able to offer a complete set of solutions in the IoT market through “the capability of being able to inject a certificate or key - a digital identity - into a device”.

“nCipher has the capability to handle and manage the authentication of that device,” he explained, adding that the company had been working hard on making its products more “cloud-friendly”.

“They’ve been very strong in payments and card issuance. We’ve been very strong in helping organisations provide digital payment credentials,” he added. “If you are putting a payment credential on a phone, iPad or IoT device, people use HSM to do that.”

“One of the great things about the coming together is that Entrust Datacard has been one of our technology partners for many years, so that integration has been there.”

Decisions over the nCipher name and its nShield brand have yet to be made.

But Peter stressed: “One of the reasons Entrust Datacard is acquiring the company is not just for the products and the technologies but for the people who can help it grow. This is designed as a growth acquisition.”

Announcing the agreement, Philippe Keryer, executive vice-president, strategy, research and technology at Thales, said: “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 organisation 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.”

Todd Wilkinson, president and CEO of Entrust Datacard, added: “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 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.”