In a bid to rescue one of France’s former tech crown jewels, the French government has stepped in with a non-binding offer to acquire strategic assets of the struggling IT services company Atos SE. The move comes as Atos grapples with mounting financial challenges and seeks to raise additional funds to stay afloat.
Government Proposes Acquisition of Key Divisions
On Monday, April 29, 2024, Atos confirmed that it had received a letter of intent from the French government, proposing the acquisition of the company’s supercomputer, quantum computing, and cyber products operations. These divisions generate annual sales of around €900 million ($962 million).
Finance Minister Bruno Le Maire emphasized the government’s goal to keep Atos’s strategic activities under exclusive French control. He stated that the government intends to form a consortium with French private companies should the offer proceed, although he did not specify which companies would be involved.
Atos’s Financial Woes Deepen
The government’s intervention comes as Atos faces escalating financial pressures. The company recently announced that it would require €1.1 billion to sustain its business operations throughout 2024 and 2025, a significant increase from the previously stated €600 million.
Atos, once valued at around $15 billion, has seen its market capitalization plummet in recent years due to a series of setbacks, including accounting errors and profit warnings. The company’s debt has ballooned to €3.65 billion ($4 billion), with similar losses expected.
Restructuring Efforts and Failed Deals
Atos has been engaged in restructuring talks with creditors and banks, with a court-appointed mediator overseeing the conciliation process. The company’s attempts to offload assets to Airbus SE and Czech billionaire Daniel Kretinsky have stumbled earlier this year, forcing the French government to step in with interim financing.
In February 2024, Atos announced the cancellation of its €720 million ($774 million) rights issue, which was intended to help strengthen its balance sheet. The company warned that any measures to prevent bankruptcy could lead to significant dilution of existing shareholders.
Former CEO Thierry Breton Under Scrutiny
The collapse of Atos has brought scrutiny to its former CEO, Thierry Breton, who led the company from 2008 to 2019 before becoming the EU’s commissioner for industrial affairs. While Breton has rejected any responsibility for Atos’s troubles, claiming that he left the company with no debt and in a good position, the company’s rapid decline has raised questions about his leadership.
Uncertain Future for Atos
As Atos awaits the outcome of the French government’s offer and continues its search for additional funding, the company’s future remains uncertain. France has expressed its intention to keep Atos in “French hands” at any cost, but the road to recovery appears challenging.
The tech giant’s fall from grace serves as a cautionary tale for the industry, highlighting the importance of adaptability, sound financial management, and the ability to navigate the ever-changing landscape of the technology sector.
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