French multinational Atos SE is reportedly in talks with Daniel Kretinsky, a Czech magnate, to offload its loss-making legacy operations. The deal, estimated at $2 billion, stands to alter the business landscape for both entities.
A Strategic Divestment for Atos
Atos’s legacy operations, predominantly its Tech Foundations business, have been a drain on the company’s profitability. Specializing in infrastructure management services, the Tech Foundations division is now targeted for sale to Kretinsky’s investment vehicle, EP Equity Investment (EPEI).
This move could allow Atos to alleviate its debt and concentrate its resources on its stronghold—cybersecurity and cloud services. The sale is projected to net Atos approximately €100 million in cash while decreasing liabilities by a staggering €1.9 billion.
Kretinsky’s Empire Expands
Known for his aggressive investments across Europe, particularly in the energy sector, Kretinsky has also made inroads into French businesses, with recent acquisitions including the Casino retail chain and Vivendi’s publishing division, Editis. The potential acquisition of Atos’s legacy operations aligns with Kretinsky’s strategy of procuring undervalued assets and turning them into profitable ventures.
Shift in Atos’s Turnaround Strategy
The deal alters Atos’s previously planned strategy, which involved a split into two separate entities. The company now plans to retain the Tech Foundations division under the Atos brand, while other assets—including the BDS cybersecurity division and supercomputers—will be consolidated under a new brand, Eviden.
Atos aims to raise €900 million through a share sale and the divestment of its legacy operations, strengthening its financial position and reducing leverage. Kretinsky’s EPEI will secure shares worth €180 million, granting him a 7.5% stake in Eviden. The remaining €720 million worth of shares will be underwritten by BNP Paribas and JP Morgan.
Potential Implications for Atos and Kretinsky
The sale carries significant implications for both Atos and Kretinsky. For Atos, it paves the way for a dedicated focus on its key competencies, paving the path for future growth and profitability while bolstering financial security through debt reduction. For Kretinsky, it presents an opportunity to diversify and expand his portfolio, potentially adding value to his long-term investment plan.
Positive Market Reception
The potential acquisition was well received in the market, reflected in an 8% surge in Atos’s share price. This increase demonstrates investor confidence in Atos’s organizational overhaul and future prospects, especially given the stock’s past fluctuation from around 100 euros in late 2017 to approximately 10 euros prior to the sale announcement.
Atos Leadership and Restructuring
Atos recently announced leadership changes amid its restructuring plans. After serving a year, CFO Nathalie Senechault will be succeeded by Paul Saleh, underscoring the company’s commitment to change and growth.
Looking Ahead
In conclusion, the potential acquisition marks a significant step for both Atos and Kretinsky. The sale will enhance Atos’s focus on its key areas of cybersecurity and cloud services, while providing a strong financial footing. For Kretinsky, it offers an expansion of his already diverse investment portfolio. Given the favorable market response, both parties stand to benefit from this deal.
