Airbus has abandoned plans to purchase an Atos business line, which would have eased Atos’s debt burden.
Airbus announced in a statement it would not be buying the big data and security (BDS) business unit on Tuesday, after careful consideration of the potential transaction. The announcement sees Atos lose out on a €1.8bn lift.
In three years, the IT and consulting giant has lost over 90% of its value, taking it down to a market value of £188 million. Airbus ending talks on the deal drove Atos’ shares down by around 21%, an all-time low.
This was the second potential deal with Atos that the aerospace company has axed in the space of a year. The former was dropped after Airbus faced backlash from its own investors.
Atos loses chance with Airbus
This marks the latest in a series of blows for the software company. Following a revolving door of CEOs and overpriced acquisitions, amid other challenges, the business has made several attempts to divest and relieve its deepening debt pockets.
Airbus and Atos had confirmed in January that talks over the BDS business were underway. Atos chair Jean-Pierre Mustier was considering options to tackle the company’s large debt burden while attempting to alleviate worries that any of the company’s arms that contained sensitive national security functions could not be accessed externally by foreign players.
Political fears arose from Airbus investors due to both companies’ ties with the French security network. Atos is responsible for securing communications for the French military, secret services and manufacturers’ servers involved in processing swathes of data used for research purposes or to potentially develop emerging artificial intelligence work. While Airbus is headquartered in France, its defence arm is heavily weighted towards Germany.
“We had seen the deal as a negative for Airbus, given concerns that this might be a political deal, and its negative impact on buyback potential,” Jefferies analyst Chloe Lemarie told Reuters.
Opportunities for Atos are dwindling
Opportunities for Mustier are looking slim, as a separate deal to sell off Atos’s legacy IT infrastructure unit, repackaged as Tech Foundations, to Czech billionaire Daniel Křetínský also fell through in February this year.
Earlier this month, Atos told Tech Monitor via email that “The sale of Tech Foundations is still part of our divestment plan and, as we announced due diligence with Airbus on the potential sale of the BDS business is ongoing.”
But with both deals now dropped, the threat of bankruptcy talks looms if Atos is unable to secure productive outcomes from negotiations with its creditors.
Off the back of the deal’s demise, Atos announced in a statement that it is analysing the situation and evaluating strategic alternatives to take into consideration the sovereign imperatives of the French state.
Following the no-deal announcements, Airbus saw a rise of 1.8% in shares. Dropping the deal positions Airbus more favourably for its investors, as it can pay them returns while enjoying higher share prices over Boeing.
