The dismemberment of Atos and the management crisis are not going to market, company news

Julien Marion and Valerie Wenk,

Agefi-Dow Jones

PARIS (Agefi-Dow Jones) – At the height of the crisis, Atos continues to suffer from poor stock market performance. After losing 11% on Monday due to speculation that its historic IT services business will be isolated into a separate entity, the digital services company’s stock fell more than 20% on Tuesday morning in response to confirmation of the project and the announcement of its manager’s resignation. director Rodolphe Belmer.

At 11:45 a.m., shares of Atos fell 20.7 percent to 14.91 euros, the biggest drop in the SBF 120 index.

On Tuesday, Atos confirmed that it intends to split into two separate companies, a strategic decision that will lead to the resignation of its CEO by the end of September. Although several media outlets recently mentioned the strategic differences and tensions between the board of directors and the CEO of Atos, Rodolphe Belmer justified his departure on Tuesday by saying that “the position of” group CEO “was intended to be” redundant “.

During a conference call with journalists, he considered it “normal” and “healthy” that there was a debate in the council. The board of directors “has made a decision, its decision is sovereign, it imposes itself and the role [directeur général] and society must follow this strategy, “he said.

Rodolphe Belmer took the helm of Atos in early January and announced a reorganization in February to improve the group’s business performance and return to revenue growth. The reorganization was structured around three business lines – technology funds, digital data, big data and security – and four regions headed by a center of commercial excellence.

Evidian IPO until the end of 2023

The split-up project, announced on Tuesday, seeks to consolidate historic data center infrastructure management activities under the new Atos and create a new company called Evidian, which will combine digital transformation activities as well as big data and security (BDS). According to Atos, its division could be completed in the second half of 2023, and the Evidian IPO will take place by the end of the same year.

Atos shareholders will retain 70% of Evidian’s capital. The product of the remaining 30% of the market will finance the cost of restructuring the rest of the Atos perimeter, 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 before the split.

The spin-off from Atos should allow the company to “focus on its logic of maximizing cash flow generation” in a declining business, while Evidian “will be able to devote all its resources to financing its development and growth to stay at the forefront of the race for innovation.” said the manager.

An ambitious project of transformation

However, a strategic transformation of this magnitude is an ambitious project in an uncertain macroeconomic context, warn Citi analysts, noting the importance of the necessary financing and the non-financial consequences of the restructuring. “We welcome these ambitions, but remain cautious,” they said, maintaining their “neutral” recommendation and target price of € 25 per title.

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

In fact, the operating margin of the new Atos, negative at 1.1% in 2021, will become positive again only in 2025, and then exceed 5% in 2026. This new company will implement a recovery plan, providing stability in 2025 and a return to growth from 2026. Last year, the new Atos reached a turnover of 5.4 billion euros, down 12%.

Evidian aims for average organic growth of 7% over the period 2022-2026 and an operating margin of 12% in 2026. The activities grouped under this unit reached a turnover of 4.9 billion euros in 2021, an 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.

Atos has appointed two Deputy Chief Executive Officers, Nurdin Bihman and Filip Oliva, to lead the two new organizations, who will lead the new Atos and Evidian, respectively. Although Nurdin Bihman has held numerous positions at Atos over the past 20 years, Philip Oliva joined the company in April as the Group’s newly created Commercial Director. He previously held the same position at Eutelsat, a satellite operator headed by Rodolphe Belmer until the end of 2021.

Atos also announced the disposal of non-core assets, mainly within Evidian, totaling 700 million euros. Atos also announced on Tuesday that it had sold its entire stake in Worldline. This exit from the capital of the payment company brought a net profit of 220 million euros.

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

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

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6:03 PM Eastern Time on June 14, 2022 (10:03 AM GMT)