Atos before demerger – Airbus submits offer for Evidian
Munich Europe’s largest IT service provider Atos is hoping for a fresh start with the split planned for this year. “Atos went through a serious crisis, but now optimism is growing internally and among investors,” said co-boss Philippe Oliva, responsible for the spin-off with the working name Evidian, the Handelsblatt. With the spin-off in the second half of the year, agility will increase, customer access will improve and growth will accelerate.
Atos had temporarily overslept important trends and had fallen into the red. Now promising activities such as cloud, big data, IT security and quantum computing are to be made independent and listed on the stock exchange.
Before that, the French company wants to sell up to 30 percent of the Evidian shares in order to use the proceeds to reposition the traditional, lower-margin business, for example with IT services and the provision of data centers.
“With the spin-off of the higher-growth future topics such as cybersecurity, Atos gives them the opportunity to shine more strongly,” says industry analyst Frank Heuer from ISG. Like few other providers, the future Evidian can offer end-to-end solutions in the area of data security – from advice on the product to implementation and maintenance.
In addition, as a European company, it is particularly convincing when it comes to data protection. However, Atos has so far mainly been geared towards large customers. There is great market potential, especially in medium-sized companies, where companies have some catching up to do when it comes to cybersecurity.
Evidian wants leading position in Europe Remove
However, the environment for Evidian is favorable now, believes Oliva. The geopolitical tensions and problems during the corona pandemic and in view of the war in Ukraine showed that Europe had to do better to protect its interests in terms of data sovereignty and data security. This applies to companies as well as to the defense sector, which the company supplies with encryption solutions, for example.
“Europe has to do a better job there,” said Oliva. Other states like that USA are much more active here, which is also shown by US President Joe Biden’s IRA subsidy program. Evidian is well positioned to develop solutions. “We aim to expand our position as a leader in cybersecurity and data protection, enabling digital transformation in a secure cloud environment,” said Oliva.
According to experts, the importance of cyber security in times of data theft is the same as for automotive suppliers Continental, the Ukraine war and growing global tensions. “Cyber attacks can threaten the existence of companies in all sectors,” said Bitkom-CEO Udo Littke.
The industry association expects that the market for IT security alone in Germany this year will grow by ten percent to 8.5 billion euros. In 2025, the ten billion mark is to be cracked. Experts around the world are also expecting annual growth of a good ten percent on average.
Investors are correspondingly interested in investing in Evidian. Among them is the aviation and armaments group airbus. One strives for a “strategic partnership” with Evidian, said CEO Guillaume Faury recently. According to Atos has airbus submitted a non-binding offer for a stake of 29.9 percent. The board of directors will continue the talks, but is also on the lookout for other interested parties.
Evidian achieved an operating margin in 2022 – significantly more than the entire group.
According to industry expert Heuer, an entry by Airbus would fit. Topics such as digitization, cloud and cybersecurity are also becoming increasingly important in the aviation and defense industry, and a European solution in this field is of particular importance.
Airbus is considered a preferred partner
The designated Evidian boss Oliva, who also sits on the board of Atos, indicated that Airbus was his partner of choice: “That would be a good fit.” The decisive factor is not only the amount of the bid, a prospective buyer must also fit strategically. You are looking for a partner with whom you can drive innovation.
Both parts of the Atos Group have recently made progress. Last year, the company returned to growth with a slight currency-adjusted increase in sales to 11.3 billion euros.
It was already clear where the future fields lie. The spin-off Evidian was able to increase revenues by almost five percent to 5.3 billion euros, while the traditional business operating under the name Tech Foundation recorded declining sales. Evidian’s operating margin of 5.2 percent is also significantly better than Tech Foundation’s (1.2 percent). The bottom line is that the entire group made a loss of around one billion euros.
We first have to deliver and win the trust of the capital markets. Designated Evidian boss Philippe Oliva
According to a high-ranking insider, the restart of the two Atos parts will not be easy. The split ties up capacities, structures would now have to be built twice. In traditional business in particular, it is a major challenge to embark on a profitable growth path.
In their outsourcing segments, service providers such as Atos and T-Systems had taken over the IT on a large scale from companies that preferred to outsource it. However, this business in particular proved to be personnel-intensive and not very profitable. Prices are also under pressure in many segments. In addition to established providers such as Atos, IBM and T-Systems are also pushing cloud providers like Amazon Web Services and Microsoft Azure into the segment.
In the medium term, Oliva wants to increase Evidian’s revenues by an average of seven percent a year. In the final quarter of 2022, however, growth was already in double digits. The prognosis is conservative, admitted Oliva. “But first we have to deliver and win the trust of the capital markets.” The operating return on sales should increase from eight to twelve percent over the years.
However, Evidian will have to take the larger part of the group’s debt of 1.45 billion euros into independence. Oliva only said: “The capital structure of the two companies will be determined in detail in the second half of the year.”
More: Why investors are targeting German IT companies.
First publication: 03/20/2023, 3:17 p.m.