Atos may sell national security activities to French government

Atos might have discovered a method to relieve its continuous financial obligation issues: The French federal government has actually used to pay up to EUR1 billion ($1.07 billion) for the part of its organization dealing with agreements essential to nationwide security, however stops brief of complete nationalization of the business.

French Minister of Finance Bruno Le Maire stated that the federal government had actually manifested its interest in getting all of Atos’ sovereign activities. “The objective is for tactical activities to stay under French control,” he stated in an interview late Sunday with French television channel LCI.

The federal government’s non-binding deal comes as Atos looks for to raise over $1 billion in brand-new financing to keep it afloat through completion of next year. Financiers aren’t precisely hurrying to assist. Atos had actually set a due date of April 26 for brand-new and existing stakeholders to make it a deal, however at the last minute was required to extend it by a week, to May 3. The business exposed the federal government deal on April 29.

The struggling IT services business has actually been looking around numerous parts of its company in a mission to raise funds and assist it settle its financial obligation, however a succession of offers have actually failed over the in 2015.

The most significant of those was a strategy to divide the business in 2, offering the tradition handled facilities services service to EP Equity Investmenthowever that collapsed in February 2024. Numerous descriptions have actually been used for the failure of that offer, consisting of that the French federal government was worried it might leave important state interests in foreign hands, or that the celebrations could not settle on just how much of Atos’s financial obligation EPEI would handle.

Sovereign tactical imperatives

Another offer failed when European airplane maker Airbus suddenly deserted a strategy to pay Atos EUR1.8 billion for its whole huge information and security department. It’s part of that department for which the French federal government has actually used in between EUR700 million and EUR1 billion, particularly the innovative computing, mission-critical systems, and cybersecurity items activities, which represented around two-thirds of the department’s EUR1.5 billion profits in 2023.

Amongst the services Atos offers the French federal government are supercomputing centers for the upkeep of France’s nuclear deterrent, and the advancement and upkeep of mobile IT systems to its defense forces.

Atos invited the deal, which it stated will “secure the sovereign tactical imperatives of the French State.”

The federal government deal might likewise bring back client self-confidence in Atos after a year of chaos throughout which, in addition to its battle to protect financing, the business has actually seen a succession of CEOs reoccured.

That self-confidence was plainly doing not have in Q1 of 2024, with earnings down 2.6% compared to a year previously, as clients postponed agreement choices or decreased the scope of work they handed to Atos. Worryingly, the decrease was sharper (-3.9%) in the apparently higher-growth Eviden half of the business’s service, which concentrates on more contemporary IT services such as huge information and digital improvement.

The tradition handled facilities services half of the business, Tech Foundations, likewise saw earnings decrease, however just 1.5%. Its book-to-bill ratio dropped to 47% from 68% a year previously, recommending that consumers are hesitant to make long-lasting dedications even for the upkeep of business-critical tradition facilities.

After stopping working to offer both Tech Foundations and its huge information department, Atos CEO Paul Saleh has actually needed to produce a brand-new go-to-market strategy for the combined organizations.

Having just taken control of in Januaryhe stated the improvement of the business’s digital and Tech Foundations activities is continuing, and blamed bad Q1 efficiency on “softer market conditions in crucial areas such as the Americas and Central Europe, in addition to hold-ups in agreement awards.”