Atos, a French Tech Giant, Tumbles in Value

Atos, a French Tech Giant, Tumbles in Value

The French government announced Tuesday that it would take action to protect Atos, a “too big to fail” French tech giant that oversees data and cybersecurity for the country’s nuclear weapons programs and military, as well as the upcoming Olympics Paris is managing towards financial uncertainty.

Atos shares plunged more than 20 percent after Airbus, the European aerospace giant, said it was in talks to buy Atos’ cybersecurity assets for up to 1.8 billion euros, following a review of the company’s finances (approximately $2 billion). Atos later said it would postpone its earnings release scheduled for Wednesday “to consider strategic options.”

French Finance Minister Bruno Le Maire said the government was closely monitoring the situation and was working on a “national solution” to protect Atos. “All of France’s interests will be protected,” Le Maire said, adding that he would use all the means at his disposal “to ensure the protection of strategic activities.”

Atos is not a prominent name among the world’s largest technology companies, but in France it plays a strategic role in national security and the management of sensitive data in the civil and military sectors. The company has grown into a European data and supercomputing powerhouse over the last decade, operating in 69 countries, employing 95,000 people and generating annual revenue of €11 billion.

Much of that growth was based on a debt-financed wave of acquisitions, many of which were led by Atos by Thierry Breton, a former finance minister and current European commissioner for internal markets. The company now faces 3.65 billion euros in loans and bonds that must be repaid or refinanced by the end of 2025.

In 2021, Atos’ share price took a hit after it was reported that the company would acquire an American competitor, DXC Technology, for $10 billion. The deal was scrapped a month later due to investor concerns, and Atos was dealt another blow after auditors found accounting errors at two of its U.S. operations. Atos also failed to keep pace with the rise of cloud computing by rivals such as Amazon and Microsoft, further eroding investor confidence. The company has had three managing directors in as many years.

In a statement on Tuesday, Atos said it was “actively examining strategic alternatives that take into account the sovereign needs of the French state.” Its shares, which topped 75 euros three years ago, were trading at just 1.74 euros on Tuesday.

Its most valuable assets became the target of a takeover bid last year from Daniel Kretinsky, a Czech telecoms billionaire whose efforts were fiercely opposed by French politicians – some of whom called for the nationalization of Atos to keep it in French hands.

Mr. Le Maire stopped short of calling for nationalization. However, he said the government’s priority was to “find solutions to stabilize its financial situation and provide necessary visibility to stakeholders, especially the company’s employees.”

Among other things, Atos owns the supercomputer that allows the French military to simulate nuclear bomb tests after the government banned physical tests in 1996. Électricité de France recently contracted an Atos company, Eviden, to provide control systems for six nuclear reactors the French government plans to build in the coming decade.

Atos software is used for French Rafale fighter jets and even for the French armed forces’ secure telephone lines. Airbus, a maker of fighter jets and military helicopters, had expressed interest in Atos’ big data and cybersecurity assets as it expands its program amid rising European defense budgets.

In a brief statement on Tuesday, Airbus said it would end talks with Atos, but gave no reason.

Atos’ software and computing power is also used by France’s national tax and health authorities. The company recently won a contract to host personal data and provide cybersecurity for the Paris Olympics this summer.

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2024-03-20 04:00:30