Gemalto becomes operational with this new step in the combination

Amsterdam and Luxembourg, June 2, 2006–Axalto (Euronext NL0000400653 AXL) and Gemplus International S.A. (Euronext: LU0121706294 – GEM and NASDAQ: GEMP) announce that the contribution in kind to Axalto of the interests in Gemplus of TPG and the Quandt family entities, 25.2% and 18.3% respectively, in aggregate 43.4% of Gemplus share capital, has been completed today on the basis of an exchange ratio of 2 Axalto shares for every 25 Gemplus shares. Prior to the contribution in kind, Gemplus had initiated the distribution of € 0.26 per share to all its shareholders of record as at today’s market close.

Further to these actions, Axalto changed its name to Gemalto. This transaction represents the creation of a new world leader in digital security, with 2005 pro forma revenues of approximately €1.7 billion (US$ 2.2 billion), operations in 120 countries, large operational centers in the Paris and Marseille areas, and 11,000 employees including 1,500 R&D engineers.

Gemalto will launch a voluntary public exchange offer for the remaining Gemplus shares at the same exchange ratio of 2 Gemalto shares for every 25 Gemplus shares. An offering circular for the offer has been filed with the French stock market authority, the “Autorité des Marchés Financiers” in Paris. The Board of Directors of Gemplus has recommended that Gemplus shareholders tender their shares to the public exchange offer.

After further review, Axalto and Gemplus have reconfirmed their initial estimate of the synergies arising from this transaction, expected to amount to €85 million (US$100 million) per year on a fully-phased basis. This represents almost 70% of Gemalto’s pro forma 2005 operating income.

Axalto and Gemplus have worked together since the merger announcement in December 2005 to develop a detailed, structured program to allow a rapid and efficient integration process. In particular, the companies are ready to operate immediately under a single brand, have defined a joint customer-facing sales team and elaborated a go-to-market strategy aiming to minimize possible sales attrition. Consistent with this program, purchasing is ready to be pooled as from day one, with significant positive effects expected in the first quarters following the completion of the contribution in kind. The first two levels of management of Gemalto have already been announced and become effective immediately, concerning over 150 executives from Axalto and Gemplus, and the next level of management will be announced in the coming days. A full review of the Gemalto cross-functional business and supporting processes is expected to be completed before the end of the third quarter of 2006.

Olivier Piou, CEO of Gemalto commented: “This is a very special day for us. Gemalto represents a true merger of equals, a meeting of minds and people dedicated to building a world-class leader in digital security. Our unique combination creates a compelling platform to capture future industry growth, one that will benefit our clients, our employees and our shareholders. Each and every one of us is now fully focused on delivering on Gemalto’s vision and ambition.”

Alex Mandl, Gemalto’s Executive Chairman said: “A major priority of the Board and management of Gemalto will be to achieve the successful and rapid integration of the two companies that preserves the key strengths of the culture, management and business practices of each and allows the efficient realization of the expected synergies.”