The investment firm EPEI has walked away from talks to buy Atos’ Tech Foundations division. According to a statement published by the French technology company earlier today, negotiations between the two parties over the sale of the legacy IT division faltered over questions of pricing. The market reacted poorly to the announcement, with Atos’ shares falling by up to 5% in early trading.
“The parties have not reached a mutually satisfactory agreement,” said Atos. As such, the firm said, it would “continue to run Tech Foundations and [its cybersecurity division] Eviden as separate businesses and leverage the strengths of their respective offerings with a coordinated go-to-market strategy. Atos will continue to consider strategic options that are in the best interest of its customers, employees and shareholders.”
Atos transition faltering
The end of talks with EPEI marks the latest in a long line of setbacks for Atos in recent months, as it struggles to reposition itself as a provider of cloud-based services while trying to stave off an estimated €3.65bn in debt payments by 2025. Part of its plan to do so has involved hiving off key assets unnecessary to its long-term transition plans. Its success has been mixed, with Airbus making and then withdrawing an offer to buy Atos’ division Eviden, before entering into talks to buy cybersecurity unit BDS.
Attempts by Atos to sell its Tech Foundations division to EPEI appeared more promising, with the pair almost agreeing on a price in August 2023. Three months later, however, Atos’ new chairman Jean-Pierre Mustier reopened talks with EPEI in the hopes that it might get a better price. Appetite for doing so appears to have been lacking on EPEI’s side, with a source at the firm telling Reuters that it “didn’t want [the deal] under adjusted conditions.”
French IT giant future in doubt
The market update also shed new light on Atos’ financial position, revealing that revenue for FY 2023 stood at €10.6bn, “up +04.% organically.” However, the French IT giant also reported a negative free cash flow in the second half of last year of €1.078bn, a drop Atos attributed to higher-than-anticipated reorganisation costs and “lower working capital actions.” Its net debt, meanwhile, was €2.23bn by year’s end. Going forward, Atos said that it would “continue to consider strategic options that are in the best interest of its customers, employees and shareholders.”
That may not be enough to end speculation about the viability of Atos as a going concern. The firm’s lenders have refused to countenance more generous repayment terms, while banks including MUFG and Santander have offloaded parcels of Atos debt at steep discounts. Earlier this month, too, French finance minister Bruno le Maire felt impelled to inform readers of the newspaper Les Echos that his government would be prepared to support the company if its financial situation continued to deteriorate. Atos remains a major employer in France, with a workforce of around 10,000 people overseeing several vital IT projects across its defence industry.
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