France's Atos circled by private equity firms

Cinven is among the PE firms interested in taking the Paris-listed consultancy private, two sources said. Other firms that may be looking include KKR, Advent and Bain, one of them added.

Some potential investors have already reached out to Atos's CEO Elie Girard, but the company has so far turned down their approaches, one source said.

Banks are positioning for possible mandates, two of the sources said, and one source claimed Rothschild and Lazard were among them. HSBC is also looking to get involved, the second source said.

Atos has recently been beset by governance issues, making it a vulnerable target, one source said. In April, it revealed "internal control weaknesses over financial reporting process and revenue recognition" of two of its US units. Its shares are down around 49% year-to-date for a current (6 Aug) market cap of EUR 4.28bn.

The company's strategy is unclear, especially since its failed attempt this winter to acquire US-based peer DXC Technology in what could have been a USD 10bn deal, one source said. Atos said in January that the acquisition would have allowed it "to create a digital services leader benefiting from global scale, talent and innovation".

Still, any approaches could prove challenging for potential bidders, two of the sources warned.

Atos is seen as a key French strategic asset, which would attract scrutiny by French foreign direct investment (FDI) legislation, one source and a further source familiar with the company said, adding that the company is likely to receive attention by the French state.

"A takeover would definitely be looked at from an FDI perspective," the source familiar with the company said. Atos is considered a major technology-related company in France so a take-private going into foreign hands would be a challenge from a regulatory perspective, this source said.

Meanwhile, any bidder seeking a squeeze-out would need to reach a 90% acceptance threshold under French takeover rules, the second source said. Atos's shareholder base is widely dispersed with few major holders, and this could make it difficult to strike agreements with key stakeholders, this source added.

A sale of the company is unlikely before the French presidential elections slated for next April, given the deal's political sensitivity, two source argued. But an amicable approach could be considered if the stock continues to fall, one of them said. If the company's prospects should worsen, a French firm like technology group Thales or a consortium led by French investors could potentially consider a friendly approach for Atos, he suggested.

Cinven, KKR and Advent declined to comment. Atos, HSBC, Rothschild, Lazard, Bain and Thales did not respond to requests for comments.

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• Topics
• Buyouts
• France
• Technology
• Cinven
• KKR
• Advent International
• Bain Capital