Billionaire Kretinsky in talks to buy Atos unit for $2.2 billion.
Billionaire Kretinsky in talks to buy Atos unit for $2.2 billion.
Czech billionaire Daniel Kretinsky eyes Atos’s legacy operations
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PARIS, Aug 1 (ANBLE) – Czech billionaire Daniel Kretinsky is in talks to purchase Atos’s loss-making legacy operations in a 2 billion-euro ($2.20 billion) deal. This strategic move aims to refocus the struggling French company on its cybersecurity and cloud assets while reducing its debt burden.
Kretinsky, known for his ANBLE in the energy sector, has been expanding his vast empire in Europe and has shown a voracious appetite for acquisitions in France. His interests span from French retailer Casino to Vivendi’s publishing group Editis. Now, he sets his sights on Atos’s Tech Foundations business, which offers infrastructure management services.
Atos’s turnaround plan and the birth of Eviden
The sale of the Tech Foundations business marks a significant shift in Atos’s initial turnaround plan to split the company into two entities. After the sale to Kretinsky’s EP Equity Investment (EPEI), the business will continue to operate under the Atos brand. The remaining listed entity, named Eviden, will encompass assets deemed strategic by the French state, such as the cybersecurity unit BDS and supercomputers.
Strengthening the balance sheet
To further shore up its balance sheet, Atos plans to undertake a 900 million-euro share sale. As part of this capital raise, 180 million euros worth of shares will be reserved for EPEI, granting the Czech billionaire’s vehicle a 7.5% stake in Eviden. The remaining 720 million euros of new shares will be underwritten by BNP Paribas and JP Morgan.
The objective of this financial maneuver is to reduce Atos’s leverage ratio, aiming to achieve a ratio of two times its core operating profits by the end of 2025. The expected sale of the Tech Foundations business will inject 100 million euros in cash and eliminate 1.9 billion euros of liabilities from Atos’s balance sheet.
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The impact on Atos’s performance and stock value
The sale of the Tech Foundations business brings an enterprise value of 2 billion euros, highlighting the size and importance of this division within Atos. Last year, the sold division generated 4.5 billion euros of core revenue and employed 52,000 people.
The news of this deal has provided a much-needed boost to Atos’s shares, which were up by 8% at 0910 GMT. The company has experienced a significant decline in stock value in recent years, plummeting from nearly 100 euros in late 2017 to around 10 euros on Tuesday.
Leadership changes in Atos
In addition to the sale and the share offering, Atos has also announced changes in its leadership team. Chief Financial Officer Nathalie Senechault, who had held the position for one year, will be stepping down. On the other hand, incoming CFO Paul Saleh, who has recently joined the company, participated in the call with analysts on Tuesday morning.
Conclusion
The potential sale of Atos’s legacy operations to Daniel Kretinsky’s EPEI represents a significant step in the company’s journey to refocus on its cybersecurity and cloud assets, while simultaneously addressing its debt burden. This strategic move aligns with Kretinsky’s expansion plans in Europe and his increasing interest in various French assets.
With the financial injection from the share sale and the reduction of liabilities resulting from the deal, Atos aims to strengthen its balance sheet and reduce its leverage ratio over the next few years. The sale of the Tech Foundations business, with its considerable enterprise value and revenue generation, is expected to have a positive impact on Atos’s future performance.
The departure of CFO Nathalie Senechault, along with the arrival of new CFO Paul Saleh, signals changes in the company’s leadership as it navigates through this transformative period. As Atos continues to evolve and reshape its business, investors will be closely monitoring its progress and evaluating the outcomes of these strategic moves.
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