French IT behemoth Atos facing calls for nationalization as it tries to restructure

Troubled French IT giant Atos is facing more difficulties following calls for the company to be nationalized on security grounds, resulting in its share price plunging to the lowest level in two decades.

Atos, which is undergoing a protracted restructuring effort since the middle of last year, saw its shares fall by up to 12 percent after calls from lawmakers in France's National Assembly to bring the company into public ownership.

According to reports, Olivier Marleix from the conservative Les Republicans and the Socialist Party's Philippe Brun have tabled amendments to the French budget bill for 2024 calling for at least a temporary state takeover of Atos, citing national security.

On the site formerly known as Twitter, Brun stated: "On Wednesday, I will propose to the Assembly's Finance Committee the temporary nationalization of the 'sovereign' activities of the Atos group, currently being dismantled – to be carried out."

"Activities as strategic as supercomputers for our nuclear weapons, defense integration systems or even cybersecurity could come under a foreign flag," Brun declared.

Shares in Atos have now fallen by more than 90 percent over the past three years according to some estimates, and the company last year launched an "ambitious turnaround" effort that would result in the reorganization of the group into two separately listed companies.

Under the plans, the Digital, Big Data and Security (BDS) business lines were grouped into a subsidiary known as Eviden - initally branded Evidien - while the Atos Tech Foundations (ATF) business line, comprising Datacenter and Hosting, Digital Workplace, Unified Comms, and Business Process Outsourcing would continue as Atos.

Eviden was regarded as the growing part of Atos, while ATF represents the infrastructure services wing that has seen declining revenues over recent years.

The move resulted in the departure of the CEO and CFO at the time of the split in 2022, both of whom disagreed with the restructuring plans.

Earlier this year, defense and aerospace company Airbus was said to be considering taking out a 30 percent stake in Eviden, but pulled out under pressure from investors who warned that the transaction would effectively turn into a bailout of Atos.

Since then, Atos disclosed that it was seeking to complete the "restructure" by selling off the ATF part to EP Equity Investment (EPEI), which is run by Czech energy billionaire Daniel Křetínský, a move that would also give him a 7.5 percent stake in Eviden.

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Brun said on social media that as special rapporteur of the Finance Committee, he was proposing the "temporary nationalization" of both strategic divisions of Atos before they were sold off.

He cited as concerns that BDS (Eviden) manages France's army telephone system, develops encryption keys, urban surveillance software, emergency services management software, the Scorpion Combat System, communications and combat software for the French navy, components for the Dassault Rafale fighter, the production of supercomputers, and domestic intelligence research software.

"We cannot allow a foreign company to take control of these activities that are absolutely essential to our national independence," he said.

Earlier this month, it was announced that a consortium comprising Eviden and German supercomputing outfit ParTec had been awarded a contract by the EuroHPC Joint Undertaking to build Europe's first exascale supercomputer, known as Jupiter.

Omdia chief analyst Roy Illsley declined to comment in detail, but said: "I can understand the need to retain the ownership of an important/critical infrastructure company."

However, according to Reuters, a spokesperson for the French finance ministry denied that the government was considering nationalization or that it would support any amendment proposing such a move. Atos declined to comment on the record.

In an update on October 16, Atos said that a revised offer from EPEI offered "the most achievable execution path to the separation of Tech Foundations and Eviden" and that "preparatory stages of the project are under way."

It stated it was in active discussions with financiers to obtain loan waivers required for the proposed sale of ATF and secure new financing for Eviden, and that the company would continue to pursue discussions with all relevant parties and stakeholders to progress negotiations regarding the sale. ®