Atos, a leading French technology services provider, is in exclusive talks to sell a legacy division to a private equity firm led by Czech billionaire Daniel Kretinsky. The company announced the move on Tuesday, the latest development in a year of struggle for Atos.
Kretinsky’s EP Equity Investment (EPEI) group is negotiating to buy the Tech Foundations business of Atos in a 2 billion-euro ($2.20 billion) deal. As part of the proposed deal, Atos will receive 100 million euros in cash and transfer 1.9 billion euros worth of debt to the buyer.
The planned sale follows months of turbulence for the company after its IT outsourcing business struggled to keep up in the cloud-based industry. Despite a series of setbacks and profit warnings, the company is hoping to raise 900 million euros by the first quarter of 2022, including 217.5 million from the Kretinsky investment. The investment and a reserved capital increase of €20 per share will give Kretinsky a 7.5% stake in Eviden.
Stifel analyst Chandramouli Sriraman commented on the deal, stating “Post this transaction, Eviden should be free of the drag (top line, margin and FCF) from Tech Foundations, which should be a relief for investors.”
The agreement has the unanimous approval of Atos board and the buyer, Kretinsky, is optimistic about the outcome of the agreement, saying “”We are confident in the value and prospects that Tech Foundations and Eviden bring to the market. We will continue to develop the Atos brand, which ranks among the strongest in the market.”
This is the third major acquisition for Daniel Kretinsky in France this year. In addition to this deal, the company announced their intention to split their group into a legacy IT services unit and Eviden, composed of their cybersecurity, cloud, and supercomputing businesses.
Incoming Chief Financial Officer Paul Saleh remarked “Halving of the leverage ratio by 2026 is our target and we are confident in our ability to deliver that promise. We have a relatively clear vision, a lot of capital and now we have the partnerships we need to execute radical change.”
Atos is attempting to reduce their liabilities while freeing up funds and refreshing their brand in the tech world. Despite the struggles of 2020, the company is hoping to make a comeback and has gained the support of Czech billionaire Kretinsky in their restructuring mission.