Atos President Resigns, Stock Falls Amid Uncertainty Over Split and Deal with Czech Businessman

Atos, the French digital services company, has recently announced the immediate resignation of its President and Administrator, Bertrand Meunier, and the appointment of Jean-Pierre Mustier as non-executive chairman. The company also stated that its plan to split into two entities, including the sale of its historical outsourcing activities to Czech businessman Daniel Kretinsky, will not be completed before the beginning of the second quarter of 2024. Following the announcement, Atos’ stock initially rose but then fell by 3.2% at 10:50 am, trading at €4.72. Analysts suggest that while Meunier’s departure is positive news given the criticism he faced, the lack of visibility regarding the company’s future plans, details about the deal with Kretinsky, and the postponed date of the split are concerning factors affecting the stock price. Meunier, who had been Chairman of Atos’ board since 2019, initiated the controversial project to separate the company into two entities: Eviden, focusing on cybersecurity, and Tech Foundations, encompassing its historical outsourcing services. He has been replaced by Jean Pierre Mustier, an independent director of Atos’ board since May 2023 and former CEO of the Italian bank Unicredit. Laurent Collet-Billon has also been appointed as non-executive vice-chairman. Collet-Billon, former director-general of the French Defense Procurement and Technology Agency, has been an independent director of Atos since May 2023. Meunier had faced opposition from minority shareholders for several months. A resolution calling for his departure, proposed by asset manager Sycomore AM during a contentious general meeting in late June, received 34% of the votes. In a reaction to the significant losses suffered by Atos in the first half of the year, Sycomore ultimately decided to sell its stake in the company at the end of July. Other minority shareholders, as well as a group of MPs and senators, have expressed strong reservations about the deal with Kretinsky regarding Tech Foundations, which was announced in early August. Kretinsky, a Czech businessman, is set to acquire Atos’ struggling outsourcing division and obtain a 7.5% stake in Eviden. In September, two funds representing minority shareholders, Alix AM and Ciam, filed separate complaints with the National Financial Prosecutor’s Office (PNF). The former accused two Atos executives, Nourdine Bihmane and Diane Galbe, of active and passive corruption, while the latter targeted Bertrand Meunier and unidentified individuals for spreading misleading information. Additionally, the Association of Constructive Atos Shareholders (Udaac), created this summer to represent minority shareholders, sent a letter to the French financial markets authority (AMF) requesting clarification regarding several aspects of the divestment plan and reminding the AMF of its power to intervene. In a statement, the Udaac acknowledged Meunier’s resignation and stated that it would « suspend » its legal action against him. The association believes that Meunier will have to be held accountable by public authorities and former shareholders but warns that the coming days will be difficult for the market. In the meantime, the Udaac hopes that the new management, led by Yves Bernaert, who was appointed CEO at the beginning of the month, as well as the board of directors, will work constructively to find solutions without resorting to misleading the market. In a separate statement, Atos stated that it expects to complete the split into two entities in the beginning of the second quarter of 2024, « taking into account the planned timetable for obtaining regulatory approvals ». Previously, Atos aimed to finalize the operation by the end of this year. Shareholders’ general meeting to approve the split will be held before, preceded by an investor day. Atos will provide « relevant information » regarding the pro forma financial statements of Tech Foundations and Eviden, currently being prepared in relation to the planned operation, before the general meeting. The company also warned that its annual impairment test at the end of the fiscal year could result in a significant write-down of assets due, among other factors, to the planned Tech Foundations operation and the current price of Atos’ shares. Since late July, when Atos announced significant losses for the first half of the year and the beginning of discussions with Kretinsky, the company’s stock has plummeted by over 60%. Atos also stated that the exclusive negotiation with EPEI, Kretinsky’s fund, « may result in a modification of certain financial parameters of the planned operation ». If the deal with EPEI doesn’t materialize, Atos will need to access capital markets (debt and equity) and/or consider selling additional assets to ensure adequate liquidity to meet debt obligations in 2025.