Exclusive-France’s Thales considers move for Atos cybersecurity arm BDS – sources

February 2, 2022

By Pamela Barbaglia

LONDON (Reuters) – France’s Thales is working on a plan to buy the cybersecurity business of IT consultancy group Atos, which could be worth about $3 billion, despite expectations of French government opposition to any break-up, sources told Reuters.

Thales and its adviser Centerview Partners have approached several private equity firms including Bain Capital to explore a possible joint offer for Atos as part of a deal that would could see it broken up, the sources said.

French defence group Thales would buy the big data and cybersecurity business, known as BDS, they told Reuters on condition of anonymity.

Shares in Atos slumped to their lowest level since mid-2012 after it issued two profit warnings in seven months, becoming an attractive targets for private equity investors.

Yet any sale would face major headwinds in France where the government of Emmanuel Macron is wary of seeing sensitive ‘national champions’ such as Atos sold to foreign investors with presidential elections looming in April.

“The French government will strongly oppose any break-up of Atos right now,” one of the sources said.

Thales’ advisers have also begun talks with CVC Capital Partners and PAI Partners over a possible joint bid for Atos but the timing of such a move remains unclear, another said.

Thales, Atos, Centerview, Bain and PAI declined to comment while CVC was not immediately available.

The French finance ministry did not immediately respond to a request for comment.

Atos, with a market value of 3.5 billion euros ($3.95 billion), gave former French Prime Minister Edouard Philippe a seat on its board of directors in 2020 and had European Commissioner Thierry Breton as its CEO for more than a decade, making it a politically-sensitive target, the sources said.

    Atos, advised by Rothschild, has rebuffed previous overtures by Thales for BDS and would view any move by private equity funds to launch a public offer and delist Atos from the Paris exchange as hostile and unwanted, one of the sources said.

BDS is valued at between 2 and 3 billion euros ($3.4 billion) and accounts for about half of Atos’ overall revenue, the source added.

Thales and Atos have recently partnered on a joint venture known as Athea to develop a sovereign big data and artificial intelligence platform for the public and private sector with a focus on defence, intelligence and internal state security.

For Thales, bulking up cybersecurity operations has been on the cards since it bought Dutch data protection firm Gemalto for 4.8 billion euros in 2019, pledging to create a global powerhouse in digital security.

Bain, which in January bought French IT services firm Inetum in a deal worth about $2.27 billion, would use any joint buyout of Atos to expand its portfolio of tech assets in Europe, where it also controls Italy’s IT firm Engineering Group.

($1 = 0.8835 euros)

(Reporting by Pamela Barbaglia; Additional reporting by Mathieu Rosemain, Tim Hepher, Julien Ponthus and Michel Rose; Editing by Alexander Smith)