French software company Atos SE is currently in exclusive discussions to sell its Tech Foundations business to EP Equity Investment, a private equity firm led by Czech billionaire Daniel Kretinsky. The move marks a significant step in Atos' ongoing restructuring efforts, which involve splitting the company and focusing on its core businesses.
Under the proposed deal, EP Equity Investment will acquire the Tech Foundations division for €100 million in cash and assume €1.9 billion in debt. This development comes after Atos faced challenges in its IT outsourcing business, particularly in adapting to cloud technologies. As a result, the company has experienced setbacks and issued profit warnings, leading to a sharp decline in its market value.
News of the potential sale has had a positive impact on Atos' shares, which surged as much as 14.3% in Paris following the announcement. Additionally, the company's bonds also rose in response to the news.
Atos originally unveiled its plans to split into two separate units - a legacy IT services division retaining the Atos name, and a new entity called Eviden comprising its cybersecurity, cloud, and supercomputing businesses. Both units are now fully operational within the Atos Group, with the intention of listing Eviden later this year. The sale of Tech Foundations is expected to provide a significant boost for Eviden, relieving it of the financial burden associated with the legacy division.
As part of the deal with EP Equity Investment, Atos plans to raise €900 million, including a €217.5 million investment from Kretinsky's group. This investment will grant Kretinsky a 7.5% stake in Eviden through a reserved capital increase at €20 per share. It is worth noting that EPEI expressed confidence in the current management of Tech Foundations and CEO Nourdine Bihmane.
In addition to EP Equity Investment, it is possible that Fimalac, the holding company owned by French billionaire Marc Ladreit de Lacharriere, may participate as a minority investor in the acquisition and the Eviden capital increase.
To facilitate the transaction, BNP Paribas and JPMorgan Chase have agreed to provide standby underwriting for the rights issue, with the exception of the amount committed by EP Equity Investment. Atos is optimistic that its bank syndicate will grant the necessary loan waivers. Eviden is also anticipated to seek an extension of its loan maturities to reduce its overall debt burden.
Daniel Kretinsky, known for his investments in power plants through his company EPH, is expanding his presence in France with this third major deal of the year. Aside from the Atos division acquisition, Kretinsky and other investors are poised to acquire the heavily indebted French supermarket operator Casino Guichard Perrachon SA. He has also agreed to purchase publisher Editis from Vivendi SE.
In a separate statement, Kretinsky expressed confidence in the value and prospects of Tech Foundations and Eviden, affirming his commitment to developing the strong Atos brand in the market.
The Atos-Tech Foundations deal is projected to be completed by the first quarter of next year, pending regulatory approvals. The proposed sale has received unanimous approval from Atos' board, indicating a significant step forward in the company's restructuring plans.