France’s Atos entrée heads for fuzzy denouement

Deterrent. French government warned for months that Atos would not be allowed to sell its defence and security business to a foreign buyer. In absence of a bona fide French acquirer for unit of debt-len information technology group that manages France’s nuclear codes, country is stepping in to buy assets itself. That’s a good idea, but maybe not one with much of a financial return.

President Emmanuel Macron’s government intends to buy about two-thirds of Atos’s Big Data and Security (BDS) business. French Treasury values assets, accounting for roughly 10% of Atos’s total revenue, at an enterprise value of between 700 million euros and 1 billion euros. That’s not exactly a bargain.

acquired assets account for two-thirds of BDS revenue. Assuming y represent same level of division’s earnings, it would value government’s acquisition at almost 15 times this year’s operating profit at midpoint of valuation range mentioned. That is not cheap for a company that has been struggling for years, with a share price that’s lost 97% of its value in last four years. Thales and Dassault Aviation, French defence companies that may be part of future consortium of industry buyers, tre at around 16 times on same metric.

Atos creditors may feel relieved. y are locked in talks to discern how a company with a 225 million euro market capitalisation can restructure 4.9 billion euros of net debt. injection of state funds in second half of 2025 should help, as will removing uncertainty of what will happen to Atos, which can now look for a buyer without state meddling.

investment may not be a great money maker. While purchase price is minimal relative to France’s 2.4 trillion euro public debt burden, deal implies that state can convince private players to buy assets at a future date. That’s not guaranteed. Airbus, which expressed interest a few months ago, is not deemed French enough to manage nuclear codes because its defence arm is hequartered in Germany. Thales was turned down a few years ago by Atos’s n-management when it wanted to buy BDS division. Orange was interested in BDS’s cybersecurity business but not rest of assets.

None of above are likely to now overpay for assets whose value may have been affected by declining morale of its engineers. French state has many means to pressure its national champions of defence and telecommunication industries. But in this case it may have to accept that its investment is essentially strategic.