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April 29, 2024

French state offers to buy chunk of Atos

Atos reveals an offer from the French government to buy its strategic services business and has raised its cash requirement estimate for the 2024-25 period to €1.1bn.

By Greg Noone

Atos has received an offer from the French state to buy a portion of its strategic services business. These include the advanced computing, cybersecurity products and mission-critical systems departments of its BDS division, the troubled IT giant said in a market update, which together have been tentatively valued at between €700m to €1bn. The offer follows mounting speculation in France about how its government intends to safeguard various strategic IT systems managed by Atos as the firm continues to teeter. 

“This perimeter represents a turnover of circa €1 billion in 2023, out of a total of €1.5 billion for the BDS division as a whole,” said Atos. “The Group welcomes this letter of intent, which would protect the sovereign strategic imperatives of the French State. [The] due diligence phase with the French state [will] start shortly, in view of the issuance of a confirmatory non-binding offer by early June 2024.”

A photo of the Atos logo on a smartphone, with a graph on a laptop screen in the background.
After mounting speculation about how the strategic French IT services run by the company might be protected in the event of its collapse, Atos has received a non-binding letter of intent from the French government to buy the relevant business units. (Photo by Shutterstock)

Atos cash requirements raised again

Atos also published an adjusted business plan for the 2024-2027 period, after an audit found that previous estimates of how much cash the business needed to survive proved inaccurate. The IT firm has now raised this estimate for the 2024-2025 period from €600m to €1.1bn. Atos also seeks to reduce its overall debt burden by €3.2bn, up from €2.4bn. Its plan for a €300m revolving credit facility, another €300m in bank guarantee lines and an extension of its debt maturity schedule by five years, remains unchanged. 

These revisions, said Atos, had been made in response to “current business trends and softer market conditions” in key regions, as well as delays in awarding contracts as clients wait and see what growth strategy the IT firm eventually decides upon. Organic revenue growth, the company added, was not likely to occur until July 2025, thanks to higher overhead and restructuring costs and lower billable resources across its digital, BDS and Tech Foundations divisions. 

French state intervenes

The offer from the French government to buy a section of Atos’ BDS division is a rare piece of good news for the IT firm, which has suffered from poor revenue growth, a high turnover in its senior leadership team and an inability to sell off other parts of its business to Airbus or EPEI to reduce its massive debt burden. 

Altogether, the units that the French state says it wishes to acquire employ close to 4,000 people. According to finance minister Bruno le Maire, the government’s preference is to form a consortium with other “French sovereign players” to acquire the BDS units. Precisely which companies might be willing to take on the requisite amount of risk, though, remains a mystery.

Read more: The fall of Atos: What went wrong? And what happens next?

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