The end is in sight to the bitter feuding at Gemplus International SA, the world’s largest smart card vendor, after founder Marc Lassus sold his 10% stake in the company. The move should see him step down from the board, which will free up the management to concentrate on digging the company out of the financial mess it finds itself in.
Lassus sold his 10% stake to Sagem SA, a French maker of defense and telecom products, for approximately 55m euros ($54.9m). Sagem acquired the 10% stake from banks, which were holding Lassus’s shares as collateral against unpaid loans. According to reports, Sagem and Gemplus plan to offer systems combining a smart card and electronic fingerprint-recognition technologies.
There has been speculation that Sagem is angling to make a bid for the company, but this was denied by Sagem’s chief financial officer, who said that his company had no intention of increasing its holding in Gemplus.
It is currently not clear how this sale will affect Lassus’s debt to Gemplus, created when he borrowed 78m euros ($77.9m) to buy Gemplus shares. The shares plunged in value from 6 euros ($5.88) at the time of the 2000 IPO, and left Lassus unable repay the loan.
Lassus himself has refused to comment on how the share sale would affect the level of his personal indebtedness. He also refused to confirm whether he would step down from the board, but under an agreement reached last year when he stepped down as chairman, it was agreed that if his stake should fall below 10%, he would leave.
In addition to this, Lassus and fellow director Ziad Takieddline have been under threat of being fired from the board ever since allegations surfaced that they disclosed information about board directions to the media. Shareholders had been due to vote on December 19 on whether to fire them.
The Luxembourg-based company is the world’s largest maker of smart cards, but has been badly hit by a fall in demand from mobile phone makers and rising competition in Asia. It has posted six losses in the past seven quarters totaling 323.3m euros ($323m), and said that due to the uncertain economic environment, it will not meet its forecast of breaking even in its current fourth quarter. Even worse, CEO Alex Mandl said that a preliminary view of 2003 suggests that it will not be able to meet market expectations, and because its visibility is not yet clear, it can give no specific guidance about what the year will bring.
In a separate announcement, Belgian financier Albert Frere has acquired a 1% to 2% stake in Gemplus.