Once a shining star in the French business world, Atos is now facing a critical juncture. The company’s share price has fallen, debt is threatening to drown it, and a potential break-up is a possibility. The company was one of the biggest suppliers to the nuclear industry and the Olympics. A series of missteps in the past year has caused the company to stumble so badly that it is almost on the verge of crumbling.
According to reports in the pink papers, the company is in deep debt, its shares have plummeted, and it could even be broken up.
Atos is only 27 years old and was the result of the merger of several IT providers including Siemens IT Solutions in 2011, French super-computing giant Bull in 2014 and Syntel of the US in 2018. By 2023, it had revenue of over $12 billion.
A series of mistakes led to the downfall. According to the reports, Atos lost over one billion euros in market value due to a failed acquisition of US competitor DXC Technology and accounting errors.
The company had no fewer than five CEOs in less than three years, which eroded investor confidence.
The company was slow to shift to cloud computing, thereby losing ground to Amazon and Microsoft, cutting into its profits and leaving it with a debt of over two billion euros.
Atos’ future lies now in restructuring its debt, securing new funding, and regaining investor trust. Selling assets and adapting to the changing IT landscape is also necessary.
What made Atos a giant
Atos, founded in 1997 by the merger of several IT providers, has undergone numerous transformations over the years. Atos bought Siemens IT Solution and Services in 2011, French supercomputing leader Bull in 2014, Xerox ITO for $1 billion the same year, and the US player Syntel in 2018 for $3.4 billion. In 2017, Atos’ market capitalization increased and it was added to France’s blue-chip CAC 40 index. By 2022, the firm had revenue of $12.1 billion and currently employs 105,000 people worldwide.
What led to the downfall of Atos
- A series of missteps were made, one of which was the unsuccessful acquisition of US competitor DXC Technology Co. for $10 billion.
- In 2021, Atos suffered a loss of more than €1 billion in market value due to accounting errors found by auditors at two of its US entities.
- Leadership changes: The company has had five different chief executive officers in the past two and a half years. This further eroded investor confidence.
- Slow to adapt to its core business: They struggled to adapt to the cloud computing shift, losing ground to competitors like Amazon and Microsoft. The result of this was declining profits, a shrinking market value, and a debt burden of €2.4 billion.
What assets of Atos are for up sale
- Atos is contemplating the sale of its legacy IT business.
- The company’s Strategic BDS unit (cloud and cybersecurity) is in talks with Airbus for €1.8 billion.
- Atos is negotiating with a court-appointed mediator to refinance their debt. Management has been sued due to their lack of transparency.
- The future of the French IT giant hinges on successfully restructuring, securing new funding, and regaining investor trust. Restructuring efforts are underway to address the debt of €2.4 billion due in 2025.
What next for Atos
To survive, Atos must be successful in managing debt, selling assets, and adapting to the changing IT landscape. Not only the company, but also its employees, partners, and the French IT sector will be impacted by the outcome. Failure to renegotiate the billions in debt the company owes to its creditors may result in the collapse of the French IT services provider.