Airbus has opened preliminary discussions with Atos over the purchase of the French tech giant’s cybersecurity business unit, BDS, in a deal which could be worth up to €1.8bn. The acquisition would hand a much-needed financial boost to Atos, which is currently undergoing a major restructuring initiative while also attempting to service high levels of debt.
Talks between the two companies were confirmed on Wednesday morning, with Atos also revealing that the proposed €400m sale of its Tech Foundations business to private equity fund EPEI has yet to be finalised, despite being announced five months ago. If EPEI does purchase Tech Foundations, it is unlikely to make a previously planned investment in another Atos business, Eviden, a statement from the company said.
Atos is seen as a business of national strategic importance in France and holds key public sector contracts on the other side of the channel. It is a major IT supplier to the UK government, as well as other clients in the private and public sectors, but has seen its revenue plummet in recent years, with businesses choosing other providers as they move IT operations to the cloud.
Airbus in talks to buy BDS from Atos
BDS is Atos’s cybersecurity offering and currently sits within Eviden, which was formed last year when Atos split into two separate businesses: Eviden and Tech Foundations. While the former manages the company’s big data, cloud and security products, the latter oversees its legacy contracts providing on-premises IT infrastructure.
The split was supposed to allow Atos to focus on Eviden, which it sees as a major growth opportunity, but the former has struggled to balance its books. In November it revealed it may have to sell further assets to meet upcoming debt repayments, notably a €1.5bn loan that matures in January 2025, and today’s statement confirms that it is in talks with Airbus and another business over the future of BDS.
The company’s board considers that “among the various potential divestments, the sale of BDS would be a key factor, and would maintain the strategic interest of the remaining activities,” the statement said, adding that Atos has “received two letters indicating non-binding interest in its BDS business, one of which relates only to part of BDS’s perimeter.”
While the identity of the second bidder has not been revealed, the company said it would “open a due diligence phase with Airbus, whose indicative offer of an enterprise value of €1.5bn to €1.8bn relates to the entire BDS perimeter.”
Last year, Airbus expressed an interest in purchasing 30% of Eviden, but talks with Atos at that time came to nothing.
Tech Foundations sale to EPEI in the balance
Meanwhile, discussions with EPEI, an investment vehicle owned by billionaire energy magnate Daniel Kretinsky, over Tech Foundations are continuing, Atos said. These are focusing on “the price to be paid, the structure of the transaction and the transfer of a very large proportion of Tech Foundations liabilities,” the company said. “As with any negotiation, there is no certainty that these negotiations will result in an agreement.”
It added that a planned investment by EPEI in Eviden, which would have bolstered the company’s balance sheet as part of a wider share issue worth €900m, may not go ahead. “Changing market conditions and reactions require a reduction in its initially planned size,” the statement said. “In addition, the company is examining with EPEI the legal and financial conditions under which EPEI could be released, in whole or in part, from its commitment to participate in the capital increase.”
If both sales are finalised, it would leave Atos with a much-reduced portfolio of services, which may enable it to boost profitability. The first half of the 2023 financial year saw the company’s revenue fall slightly to €5.54bn, down from €5.56bn in the same period of 2022. Its operating loss grew from €294m last year to €434m, thanks in part to costs relating to the restructuring.
Boardroom turmoil has also hindered progress at Atos, with a new CEO, Yves Bernaert, appointed in October, and chair Bertrand Meunier, who championed the sale of Tech Foundations, being replaced by Jean Pierre Mustier.
Today’s update added that the company “does not rule out the sale of additional assets, particularly if the transaction with EPEI does not go ahead”.