Atos dismemberment and management crisis do not benefit the market, company news

Julien Marion and Valerie Wenk

Agefi-Dow Jones

PARIS (Agefi-Dow Jones). In the midst of a corporate governance crisis, Atos continues to suffer from poor stock market performance. After losing 11% on Monday due to rumors that its historic IT services business will be spun off into a separate legal entity, the digital services company’s share price fell more than 20% on Tuesday morning in response to the project’s confirmation and an upcoming announcement. departure of Managing Director Rodolphe Belmer.

At 11:45 a.m., Atos shares fell 20.7% to 14.91 euros, recording the biggest drop in the SBF 120 index. A sign of the difficulties accumulated by the group in recent months was a drop of 60% since the beginning of the year and 72% within one year .

Atos confirmed on Tuesday that it intends to split into two separate companies, a strategic move that will see its CEO leave by the end of September. While several media outlets have recently referred to strategic disagreements and tensions between the Atos board and CEO, Rodolphe Belmer justified his departure on Tuesday by saying that “the position of ‘Group CEO’ was destined to become ‘superfluous’.”

During a conference call with reporters, he considered it “normal” and “healthy” for the council to have debates. The Board of Directors “made a decision, its decision is sovereign, it imposes itself and the role [directeur général] and society must implement this strategy,” he said.

Rodolphe Belmer took over Atos in early January and announced a reorganization in February to improve the group’s commercial performance and return to revenue growth. This reorganization was organized around three business lines – Tech Foundations, Digital, Big Data and Security – and four regions, led by a center of commercial excellence.

Evidian IPO by the end of 2023

Announced Tuesday, the bifurcation project sees the consolidation of historic data center infrastructure management activities under the new Atos and the creation of a new company, called Evidian, that will bring together digital transformation activities as well as big data and security (BDS) activities. ). Atos estimates that its split could be completed in the second half of 2023, with Evidian’s IPO taking place by the end of that year.

Atos shareholders will retain 70% of Evidian’s capital. The product of the placement on the market of the remaining 30% will finance the cost of restructuring the remaining perimeter of Atos, estimated at 1.1 billion euros, said Rodolphe Belmer. In total, Atos estimates its funding needs at around €1.6 billion for the period 2022-2023 until the unbundling takes effect.

The spin-off from Atos should allow it to “focus on its cash flow maximization logic” in a declining business, while Evidian “will be able to direct all of its resources towards funding its development and growth to remain at the forefront of the race in terms of innovation,” said manager.

Ambitious transformation project

However, a strategic transformation of this magnitude is an ambitious undertaking in uncertain macroeconomic conditions, warn analysts at the US bank Citi, who note the importance of the necessary financing and non-financial consequences of the restructuring. “We applaud the ambition but remain cautious,” they say, maintaining their “neutral” recommendation and price target of €25 per title.

For his part, Gregory Ramirez, an analyst at Brian, Garnier & Co., said the project risks being “painful.”

Indeed, the operating margin of the new Atos, negative by 1.1% in 2021, will turn positive again only in 2025 before exceeding 5% in 2026. This new venture will implement a recovery plan to ensure turnover stability in 2025 and a return to growth from 2026. Last year, the new Atos achieved a turnover of 5.4 billion euros, 12% less than in organic terms.

Evidian aims for CAGR of 7% over 2022-2026. and an operating margin of 12% in 2026. The activities grouped under this division achieved a turnover of €4.9 billion in 2021, organic growth of 5% and an operating margin of 7.8%. Evidian plans to invest 400 million euros over the next five years to accelerate its development.

To lead these two new ventures, Atos has appointed two Deputy General Managers, Nurdin Bimane and Philippe Oliva, who will lead the new Atos and Evidian, respectively. While Nurdin Bichman has held numerous roles at Atos over the past 20 years, Philippe Oliva joined the company in April in a newly created position as Group Commercial Director. He previously held the same position at Eutelsat, a satellite operator led by Rodolphe Belmer, until the end of 2021.

Atos also announced the sale of non-essential assets, mostly owned by Evidian, for a total of €700 million. Atos also announced on Tuesday that it has sold its entire stake in Worldline. This exit from the capital of the payment company generated a net proceeds of 220 million euros.

-Julien Marion and Valerie Wenk, Agefi-Dow Jones; +33 (0)1 41 27 47 94; [email protected] editorial: ECH

(Joshua Kirby, Dow Jones Newswires, contributed to this article)

Agefi-Dow Jones Financial News Feed

Dow Jones News

June 14, 2022 6:03 AM ET (10:03 GMT)