French state waves up to €625M for Atos's Advanced Computing assets

IT services giant Atos has received another offer from the French state, this time for just its Advanced Computing assets, in a transaction that could be worth up to €625 million ($656 million).

The ailing Gallic IT biz says it has entered negotiations with the French government, having received a non-binding offer from officials to buy the Advanced Computing activities for €500 million ($524 million) – or possibly up to €625 million, depending how the business performs if the sale is finalized.

This latest move in the ongoing efforts by Atos to restructure and return to profitability follows a previous offer from the government for a larger chunk of its operations – the Advanced Computing, Mission-Critical Systems, and Cybersecurity activities of its Big Data & Security (BDS) division.

But that non-binding offer expired on October 4, without the two parties being able to reach an agreement in their negotiations.

It was then reported at the start of this month that Atos had issued a "preferred share" in its supercomputing subsidiary, Bull SA, to the French state to protect national interests related to certain "sovereign sensitive activities" it carries out, while a government finance committee was said to be looking at ways to nationalize the entire company.

According to Atos today, the target for this latest offer is to have a Share Purchase Agreement signed by May 31, 2025, following which an initial payment of €150 million ($157 million) is to be made. This would depend on securing the relevant commercial, employee, and administrative authorizations.

The Advanced Computing business that the French state would take control of is now defined as its High-Performance Computing (HPC) & Quantum operations, as well as the Business Computing & Artificial intelligence divisions. Atos says this employs 2,500 people and generated approximately €570 million ($598 million) in revenue in 2023.

If this bid is successful, Atos will also embark on a formal sale process for the other BDS assets: Cybersecurity products and Mission Critical Systems, which generated €340 million ($356 million) worth of revenues in 2023.

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"In our view, if the sales of the Advanced Computing business, and other elements of BDS go ahead, Atos's biggest challenge (which will have an impact on the UK) will be ensuring that market perception of the Group as an innovative player with strong emerging tech capabilities is not damaged," said TechMarketView chief analyst Georgina O'Toole.

However, O'Toole noted that the company's most pressing issue today is its credit rating. "That must improve for the Group to be in a better position to win new business with new clients," she said.

Atos secured a restructuring and rescue deal with a group of its creditors back in July after several years of struggling with billions in debt and declining revenues. This hasn't prevented one of the company's divisions, Eviden, from continuing to win European supercomputer contracts, as we reported last week. ®