2 weeks Ago By Iain Thomson
France's Finance Ministry has approved a proposal to nationalize French tech behemoth Atos and has allocated €70 million to explore the deal. The corporation, which handles key strategic customers such as the French military (including its telephone system) and the nation's large nuclear industry, has been in trouble for over three years now, and has gone through seven CEOs in that time. The government has been considering selling off parts of Atos to fund rebuilding, but has had little success so far.
The approval of the government buyout came in the form of an amendment to a motion originally tabled by Bastien Lachaud, of the Parti de Gauche, or Left Party. He xeeted a screenshot of the approved amendment, along with the exuberant message (translated from French): "Victory! This strategic company for the defense, as well as the daily life of the French, must be protected against the sale in pieces envisaged by the government." "Atos is in bad shape," the amendment reads.
"The company is in debt to the tune of €5 billion. The fault of an all-out purchasing and expansion strategy of the company that ended up weakening it." Last week the French government announced a funding round from its Economic and Social Development Fund for the firm, saying the investment would give the government a preferred share in the business.
"The state will thus benefit from reinforced rights, enshrined in the statutes and which may go as far as vetoing in certain cases, on the information and decisions that the company could take," said Antoine Armand, minister of Economy, Finance and Industry. "The convention and the preferential action guarantee a high level of security essential to the sovereignty of the nation and demonstrate the state's capacity to deploy the necessary protections in companies that operate strategic activities." The business has made some bad bets in the past – notably banking too much on cloud growth and breaking further into the US market.
There have been multiple restructuring talks with different partners, but nothing really has stuck and the government has been getting desperate about maintaining key IT assets that Atos currently runs. In June Atos reported [PDF] revenues declining 2.7 percent to around €5 billion in the first half of this year.
Headcount was down over 9 percent, it lost €1.9 billion, and is carrying €4.2 billion in debt – which it is now frantically trying to restructure.
It blamed "continued market softness in the Americas and Central Europe," but predicted better times ahead. Long term, the market would disagree. Twenty-five years ago Atos's stock price was nearly €150 per share, but at close of business on Monday €0.
67 was the going rate. It looks like the government could be getting a steal – or a white elephant. ®.
