Atos considers spin-off of cybersecurity unit; CEO to depart

PARIS (June 14): Atos SE’s shares tumbled probably the most on file after the corporate stated chief govt officer (CEO) Rodolphe Belmer would resign simply 5 months into his tenure, following a failure to agree on a possible restructuring that may result in a break-up of the French IT enterprise.

Atos is finding out spinning off its massive knowledge and cybersecurity enterprise in a separate entity, whereas Belmer will depart earlier than September, the corporate introduced at a capital markets day on Tuesday. Appointed in late January this yr, Belmer stated he has “no alternative however to resign” following this reorganisation, in keeping with the assertion.

Atos shares fell as a lot as 27% in early buying and selling in Paris. “We think about this restructuring will likely be painful and is unlikely to please traders within the quick time period,” stated Gregory Ramirez, analyst at Bryan Garnier & Co.

A collection of setbacks and revenue warnings has despatched Atos from a market worth of €8.2 billion (US$8.6 billion) on the finish of 2020 to €2.1 billion on Tuesday. The agency was faraway from the benchmark CAC 40 index in Paris and auditors uncovered accounting errors at two of the agency’s US entities. The collapse attracted takeover curiosity. Thales had been finding out teaming up with personal fairness on a possible takeover, Bloomberg reported in February.

“We see a number of detrimental components right here,” together with the departure of the CEO “who simply arrived”, Oddo BHF analysts wrote in a observe to shoppers. “This will result in additional administration modifications. Furthermore, which means that the staff chief who designed the turnaround plan won’t be there to hold it out.”

Belmer was appointed CEO following the surprising resignation of Elie Girard after a dire collection of outcomes. Beforehand CEO of Eutelsat Communications SA, Belmer was in command of reorganising Atos to deal with cloud-based merchandise.

The reorganisation is the board’s “choice”, Belmer stated throughout a name with reporters, refusing to touch upon reported disagreements over the corporate’s technique. He’ll obtain 9 months’ wage for his departure, whereas his contract allowed him to obtain two years of pay if leaving earlier than a interval of two years after his nomination, he stated.

Philippe Oliva has been appointed deputy CEO in command of the BDS and Nourdine Bihmane deputy CEO in command of the legacy enterprise.

If Atos goes forward with its newest restructuring, the brand new knowledge unit will likely be listed earlier than the second half of 2023 underneath the identify Evidian, whereas the ailing legacy IT service unit will proceed as Atos. The 2 firms could have separate administration.

To fulfil the undertaking, Atos estimated whole funding wants of €1.6 billion for the 2022-2023 interval, with proceeds anticipated from the sale of €700 million of non-core belongings. After the transaction, Atos shareholders will maintain 100% of the restructured firm, and 70% of Evidian. The remaining 30% stake in Evidian can be held by Atos.

“We recognize the ambition however keep cautious on account of the uncertainty related to a metamorphosis of such magnitude towards a difficult wider macro backdrop,” wrote Citi’s Amit Harchandani in a analysis observe.

A near-term sentiment shift for Atos appears unlikely, even after the corporate’s June 14 announcement that it was considering a spin-off of its digital transformation and safety companies (SpinCo), a transfer that may successfully isolate the ailing legacy outsourcing unit (52% of 2021 gross sales). However tying the safety enterprise, which is the crown jewel, to transformation companies, which have didn’t develop in keeping with market traits, might cap SpinCo’s attainable valuation upside. And Rodolphe Belmer’s deliberate departure after simply taking up as CEO in January suggests vital inside divisions over the plan, leaving the outlook unsettled.