By Julien Marion and Valérie Venck,
Agefi-Dow Jones
PARIS (Agefi-Dow Jones)–In the midst of a governance crisis, Atos continues to suffer from poor stock market performance. After losing 11% on Monday due to speculation that its historical IT services business would be isolated in a separate legal entity, the digital services company’s stock price plunged more than 20% on Tuesday morning in reaction the confirmation of this project and the announcement of the forthcoming departure of its managing director, Rodolphe Belmer.
At 11:45 a.m., Atos shares dropped 20.7% to 14.91 euros, posting the largest drop in the SBF 120 index. A sign of the difficulties accumulated by the group in recent months, it has dropped 60% since the start of the year and 72% over one year.
Atos confirmed on Tuesday that it intends to separate into two separate companies, a strategic decision that will lead to the departure of its chief executive by the end of September. While several media recently mentioned strategic differences and tensions between the board of directors and the CEO of Atos, Rodolphe Belmer justified his departure on Tuesday by the fact that “the position of ‘group CEO'” was destined to become “superfluous”.
During a conference call with journalists, he judged “normal” and “healthy” that there are debates within a council. The board of directors “has taken a decision, its decision is sovereign, it imposes itself and the role of the [directeur général] and society is to execute” this strategy, he said.
Rodolphe Belmer took the reins of Atos in early January and announced a reorganization in February aimed at improving the group’s commercial performance and returning to revenue growth. This reorganization was structured around three business lines – Tech Foundations, Digital, Big Data and Security – and four regions led by a center of commercial excellence.
IPO of Evidian by the end of 2023
The project of separation into two entities announced on Tuesday provides for the consolidation of the historical activities of data center infrastructure management within a new Atos and the creation of a new company, baptized Evidian, which would bring together the activities related to the digital transformation as well as those of Big Data and Security (BDS). Atos estimates that its split could be finalized in the second half of 2023, with an IPO of Evidian by the end of the same year.
Atos shareholders would retain 70% of Evidian’s capital. The product of the placing on the market of the remaining 30% would make it possible to finance the costs of restructuring the remaining perimeter of Atos, evaluated at 1.1 billion euros, indicated Rodolphe Belmer. In total, Atos estimates its financing needs at around 1.6 billion euros for the period 2022-2023, until the separation is effective.
Separation from Atos should allow it “to focus on its logic of maximizing cash flow generation” in a declining business, while Evidian “will be able to devote all its resources to financing its development and growth for remain at the forefront of the race in terms of innovation,” said the manager.
An ambitious transformation project
A strategic transformation of this magnitude is, however, an ambitious project in an uncertain macroeconomic context, warn analysts at the American bank Citi, who note the importance of the financing required and the non-financial implications of the restructuring. “We welcome the ambition but remain cautious,” they say, maintaining their “neutral” recommendation and their target price of 25 euros for the title.
For his part, Grégory Ramirez, analyst at Brian, Garnier & Co. believes that this project is likely to be “painful”.
Indeed, the operating margin of the new Atos, negative by 1.1% in 2021, would only become positive again in 2025 before exceeding 5% in 2026. This new entity will implement a recovery plan, providing for a stability of the revenue in 2025 and a return to growth from 2026. Last year, the new Atos achieved revenue of 5.4 billion euros, down 12% organically.
Evidian is aiming for average organic growth of 7% over the 2022-2026 period and an operating margin of 12% in 2026. The activities grouped together within this division achieved in 2021 a turnover of 4.9 billion euros, organic growth of 5% and an operating margin of 7.8%. Evidian plans to invest 400 million euros over the next five years to accelerate its development.
To manage these two new entities, Atos has appointed two Deputy Chief Executive Officers, Nourdine Bihmane and Philippe Oliva, who will take the helm of the new Atos and Evidian respectively. While Nourdine Bihman has held numerous positions at Atos over the past 20 years, Philippe Oliva joined the company in April, in the newly created position of Group Commercial Director. He previously held the same position at Eutelsat, the satellite operator headed by Rodolphe Belmer until the end of 2021.
Atos also announced disposals of non-essential assets, mainly from the Evidian scope, for a total amount of 700 million euros. Atos also announced on Tuesday that it has sold its entire stake in Worldline. This exit from the capital of the payments company generated net proceeds of 220 million euros.
-Julien Marion and Valérie Venck, Agefi-Dow Jones; +33 (0)1 41 27 47 94; [email protected] ed: ECH
(Joshua Kirby, Dow Jones Newswires, contributed to this article)
Agefi-Dow Jones The financial newswire
Dow Jones Newswires
June 14, 2022 06:03 ET (10:03 GMT)