Airbus drops deal with Atos digital unit after pressure from Chris Hohn

Airbus has bowed to pressure from billionaire hedge fund manager Chris Hohn and pulled its bid to buy a minority stake in a unit of French IT services company Atos.

Shares in Atos closed down 17 per cent to €10.71 by late afternoon in Paris after the company confirmed that the European plane maker would no longer pursue talks to take a 29.9 per cent stake in Evidian, its digital and big data arm.

The loss of that option will pile pressure on Atos, something that will concern the French government because the company owns sensitive quantum computing assets and cyber defences that Paris considers to be strategic.

The investment by Airbus would have helped Atos carry out a planned split of its operations after a period of heavy losses.

Airbus had begun talks with Atos because it was interested in boosting digitalisation and tech development across its business, said a person familiar with the matter, but decided that buying a roughly 30 per cent stake in Evidian was not the best way forward.

Airbus would not have been able to run the business, which is in the middle of a turnround, even after having invested a significant amount.

But the two companies said in separate statements that they would continue to discuss other ways they could work together. Airbus stressed that a partnership had “the potential to create significant value for both companies”, something Atos repeated.

Atos said it would “explore other options with Airbus and keep working on a strategic and technology partnership for the long term”.

Airbus said it had concluded that taking a minority stake “does not meet the company’s objectives in the current context and under the current structure”.

The company stressed that this was “an independent decision by our board of directors and management which was not influenced by outside pressure or parties”.

Guillaume Faury, Airbus chief executive, had previously cautioned that the company would only progress with a transaction if it made sense “from a financial standpoint”.

The decision not to proceed comes after Hohn, whose TCI fund is one of the largest shareholders in the European plane maker, demanded it drop its interest, describing the proposed deal as a “bailout of Atos, a company that is burdened with unsustainable levels of debt and other liabilities”.

Hohn also questioned the use of management time on the transaction, arguing that Airbus should instead be focusing on meeting delivery targets for new aircraft.

TCI, which has a more than 3 per cent stake in Airbus and has been a shareholder since 2012, had filed a motion for the manufacturer to answer 16 questions relating to the transaction at its annual general meeting next month.

Atos had announced in June last year that it planned to split itself into two separate companies, a process it aimed to complete by mid-2023 at the earliest.

On one side would be the legacy IT services half of the business, called Tech Foundations, which had about €6bn in sales last year and a narrow operating profit.

The other side would be Evidian, which incorporates Atos’s digital, big data and security business activities. The business, which has about 60,000 employees and annual revenues of about €5bn, secures communications for France’s military among other customers.

The setback with Airbus could give an opening to other suitors for all or various parts of Atos to try to pressure the board to reconsider their offers.

Long wary of selling off Atos in parts, its chair Bertrand Meunier had rejected earlier interest from defence electronics group Thales for the big data and cyber security business. Atos also rejected last September an unsolicited offer for Evidian from rival onepoint and UK private equity fund ICG.

Czech billionaire Daniel Kretinsky has also been circling Tech Foundations, but is said to want to be paid hundreds of millions to take it over given its need for restructuring. A spokesperson for Kretinsky declined to comment.

On Wednesday, onepoint said it was “totally mobilised and would study all the possibilities of a deal for Evidian”.

Separately, Thales ruled itself out of the running: “As already stated, Thales said it has never been interested in buying a stake in Evidian and given that Atos’s big data and security business is not for sale, the group has moved ahead with other strategic priorities.”

The French government has been watching developments at Atos closely, said people close to the situation, and will aim to protect the strategic assets within the company. “They will take some comfort in the fact that the discussions are continuing between Atos and Airbus,” said one of the people.

Additional reporting by Adrienne Klasa