Airbus ends talks with Atos on deal for big data and security unit

Airbus has walked away from talks with Atos over a potential deal to buy its prized data and security business, imperilling efforts by the French IT services company to avoid going into debt restructuring.

The end of the discussions on a deal potentially worth up to €1.8bn sent Atos shares falling by as much as 25 per cent on Tuesday morning before trading was briefly suspended.

Atos’s shares have lost over 90 per cent of their value in the past three years, taking the company’s market value to €188mn.

Its big data and security division houses the company’s cyber security and supercomputing capabilities. As well as managing sensitive contracts with the French military, it is also contracted to run cyber security for the Paris Olympics this summer.

Airbus said on Tuesday that “after careful consideration of all aspects of a potential acquisition”, it had decided to end discussions. Atos was “analysing the resulting situation and actively evaluating strategic alternatives”, it said in a statement, as it delayed reporting its annual results for the second time in recent weeks.

This is the second time talks on a prospective deal between Atos and Airbus have fallen apart in just over a year. Airbus decided it would have been too complex and risky to carve out and then integrate the unit, according to people familiar with the situation, as the Atos business is made up of numerous entities across different countries. The French company’s wider state of financial distress also played a role in the decision, the people said. 

“Airbus will never come back — their image is dead with Atos,” said one person with knowledge of the situation.

Airbus and Atos confirmed in January that talks over the unit were under way as Atos chair Jean-Pierre Mustier sought options to deal with the company’s big debt burden, while trying to assuage political concerns that Atos divisions with sensitive national security functions would not fall into foreign hands.

Mustier’s options have now narrowed considerably, after a separate deal with Czech billionaire Daniel Křetínský to buy Atos’s lossmaking legacy business fell apart in February.

Atos faces repayments on €3.65bn in debt before the end of 2025 — which it has been trying to push out to 2028 in talks with its bank lenders — and is rapidly burning through cash. The company reported negative free cash flow of €1bn for last year — over five times higher than in 2022 — while net debt totalled €2.23bn.

Credit rating agencies have downgraded the group’s debt to junk status and warned of its poor liquidity amid high cash burn.

The company will now try to increase the pace of negotiations with its creditors, overseen by a recently appointed mediator in what is still a voluntary process, according to several people with knowledge of the process. But if this process fails, Atos may need to go into a court-supervised bankruptcy proceeding.

Křetínský would consider coming back to the table with an offer for more of the company, according to people with knowledge of his thinking. They estimate Atos will need a capital injection of at least €600mn-700mn in new money, but his side is waiting to be courted, the people said.

Atos’s lead shareholder David Layani, the founder of digital consultancy Onepoint who has built an 11 per cent position in the company and joined the board in recent months, has also expressed ambitions to take control of Atos and anchor a capital raise, according to people familiar with his thinking.

“Atos will continue with the mediator. They don’t have immediate liquidity issues. They will open negotiations with creditors and shareholders . . . as well as Layani and Křetínský,” said the person with knowledge of the situation.