LONDON: France’s Thales is engaged on a plan to purchase the cybersecurity enterprise of IT consultancy group Atos, sources instructed Reuters, in a possible US$3 billion tie-up more likely to check the political dedication for shoring up France’s digital defences.
Thales, which ranks as Europe’s largest defence electronics firm, and its adviser Centerview Partners have approached a number of non-public fairness companies together with Bain Capital to discover a attainable joint provide as a part of a deal that will contain a fancy break-up of Atos, the sources mentioned.
Thales would purchase the massive knowledge and cybersecurity enterprise, referred to as BDS, whereas non-public fairness funds would swallow the remaining IT providers operations of Atos, the sources mentioned on situation of anonymity.
Thales mentioned in an announcement it was not at present in talks with Atos over a possible takeover, including that the corporate led by Chief Executive Patrice Caine was “potentially interested” in any cyber-security asset that might be up for sale.
Atos declined to remark.
Shares in Atos had been up 10.32 per cent at 1515 GMT after Reuters first reported on the plan, whereas Thales’ inventory was down 3 per cent.
Atos’ share worth has plummeted to its lowest stage since mid-2012 after issuing two revenue warnings in seven months, turning into a pretty non-public fairness goal.
Yet any sale would face main obstacles in France the place the administration of Emmanuel Macron is cautious of seeing such ‘nationwide champions’ bought to overseas buyers with presidential elections looming in April.
“The French government will strongly oppose any break-up of Atos right now,” one of many sources mentioned.
Thales’ advisers have additionally begun talks with CVC Capital Partners and PAI Partners over a attainable joint bid for Atos, however the timing of such a move stays unclear, one other mentioned.
Bain, which in January purchased French IT providers agency Inetum in a deal price about US$2.27 billion, would use any joint buyout of Atos to develop its portfolio of tech belongings in Europe, the place it additionally controls Italian IT agency Engineering Group.
Bain, CVC and PAI declined to remark.
The French finance ministry didn’t instantly reply to a request for remark.
HOSTILE AND UNWANTED
Atos, with a market worth of €3.5 billion (US$3.95 billion), gave former French Prime Minister Edouard Philippe a seat on its board of administrators in 2020 and had European Commissioner Thierry Breton as its CEO for greater than a decade, making it a politically-sensitive goal, the sources mentioned.
Atos, suggested by Rothschild, has rebuffed earlier overtures by Thales for BDS and would view any move by non-public fairness funds to launch a public provide and delist Atos from the Paris change as hostile and undesirable, one of many sources mentioned.
BDS is valued at between €2-3 billion (US$3.4 billion) and accounts for about half of Atos’ general income, the supply added.
Thales and Atos have just lately partnered on a three way partnership referred to as Athea to develop a sovereign huge knowledge and synthetic intelligence platform for the private and non-private sector with a give attention to defence, intelligence and inside state safety.
For Thales, bulking up cybersecurity operations has been on the playing cards because it purchased Dutch knowledge safety agency Gemalto for €4.8 billion in 2019, pledging to create a worldwide powerhouse in digital safety.
Chief Executive Patrice Caine mentioned in October there could be alternatives for Thales to strengthen its current portfolio in key markets after shopping for Gemalto, however that any belongings must carry a “good level of growth”.
Thales says cybersecurity generates about €1 billion in gross sales for the French defence and safety firm, which is managed by Dassault Aviation and the French state, whose help could be essential for any tie-up involving defence and safety applied sciences to succeed.
A hostile bid affecting applied sciences that France has described as important to its “digital sovereignty” within the face of army and civil threats, is broadly seen as unlikely.
However, a 2018 authorities examine mentioned consolidating the commercial base in cyber defence could be “advisable” to supply excessive safety whereas guaranteeing corporations had been economically viable.
Thales mentioned final month the variety of cyberattacks and episodes of ransomware had “exploded” within the final 12 months, rising by some 150 per cent, with the pandemic exposing new vulnerabilities by driving extra financial exercise on-line. Since 2019, it mentioned, the associated fee to the world financial system from cybercrime has greater than doubled.
The head of the corporate’s digital safety enterprise instructed buyers final October that growth of the cybersecurity market was “here to stay for many years,” averaging 10 per cent a yr in compound phrases.