French Government Bids on Atos' Cyber and Computing Assets

Governance & Risk Management , Government , Industry Specific

The French government could acquire a loss-making cybersecurity unit and other critical assets of Paris IT consultancy firm Atos after previous bids by competing firms fell through.

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Atos is the world's largest managed security services vendor, serving public and private-sector clients. The company has a net debt of 3.9 billion euros driven by customers moving from on-premises IT services to cloud-based services.

"We have expressed our interest in acquiring all of Atos' sovereign activities. The objective is that strategic activities remain under the exclusive control of France," Finance Minister Bruno Le Maire told French broadcasting network LCI.

Atos also confirmed the tentative offer, stating that the company received a letter of intent from the French government to acquire its advanced computing, its critical systems capable of supporting artificial intelligence development and its loss-making Big Data and Security business or BDS.

The three areas generate an annual turnover of 900 million euros, out of the total revenue of 11 billion euros for the company, reported Le Monde. The offer for the units from the French government ranges between 700 million euros and 1 billion euros.

Following the announcement from the French government, shares of the company surged by 19% on Monday.

"The Group welcomes this letter of intent," Atos said. A due diligence phase "would start shortly" by June.

The letter of intent is nonbinding. The French State Holdings Agency, which is conducting the operation, has already invested 50 million euros in Atos to stabilize its operations, the LSI reported.

The Ministry of Finance has also contacted French IT giants Thales and Dassault Aviation about investing in Atos, Midi Libre reported.

Speaking to LSI, Le Marie said the government's intervention is largely intended to preserve "Atos' sovereign activities" in a move to prevent a potential takeover by foreign companies.

Atos employs about 4,000 people and is strategically important to the French government. Its supercomputers power France's nuclear deterrence capabilities.

Atos is the official service IT and cybersecurity service provider for the nearly monthlong Paris Summer Olympics, slated to start on July 16.

Atos previously attempted to raise money by divesting its BDS division to Airbus and its Tech Foundations business to Czech businessman Daniel Křetínský, but both deals failed - mainly due to the company's debt, which is set to mature in 2025 (see: Airbus Backtracks From Planned Atos Cybersecurity Takeover)./p>

In a refinancing plan published earlier this month, Atos said it must raise 1.1 billion euros in cash to funds operations this year and next.

The company also said that if it reaches an agreement with the French government, the proceeds from the transactions will be used for repayment as part of financial restructuring. The company said it still plans to restructure its debt by July.

Atos and the French Ministry of Economics, Finance and Industrial and Digital Sovereignty did not immediately respond to requests for comment.