It is 2023. I wish you all a prosperous new year. 2023 is the year that Atos will split in 2 seperate companies. Since the announcement last year it has been very quiet, and key questions about the split have yet to be answered by Atos. In this blog post I will list 3 questions that are key to understand what will the new Atos and its spin-off “Evidian” look like. For people unfamiliar with the topic I would recommend looking at the presentation by Atos done on the Capital Markets day on June14, 2022.
Some of the details have already been floating around. In particular I read some interesting information in a recent post by The Register. Next to the already known information, the article mentions that Evidian will employ 59.000 employees. based on the Atos website, this would mean that about 5.300 employees (112.000 – 59.000) will stay with the Tech Foundation part; representing the more traditional IT services. Given the size of this Tech Foundation part, it shows clearly what Atos’ current challenge is in the area of headcount.
Question 1. What about the Managed Application Services?
Managed Application Services is a big part of the Atos business. According to the Atos website, this includes application management of ERP software (SAP, Microsoft) and other key business applications (Oracle). We also cannot disconnect this from services for various database systems. In earlier presentations by the company it is not clear if this part of the current business is considered as foundational or to become part of the new Evidian perimeter.
If these services will be moved into Evidian, then Atos will have to disciple applications from underlying infrastructure, which will a very delicate task. I am also unsure if customers would favour their services coming from 2 different companies; 1 bill from Atos Tech Foundations nd 1 bill from Evidian.
If Atos decides that Application Managed Services stays within the Tech Foundation perimeter, the benefit of upselling this service into business intelligence or data analytic services will be harder. These higher value services will then be with a separate company, opening up these account to competition in this area and removing scaling and efficiency benefits.
Question 2. How will Atos fund the split?
Atos provided limited information about the way it would secure funding for the massive operation to split the company. During the last 6 to 7 months some information became available. Selling their remaining ownership in Worldline was one part. The surprising sale of the Atos activities in Italy to Lutech (as announced in November 2022) was the second part. In total Atos said they would raise about 700 millions euro. Based on the available information they are still 240 million euro short.
Many sources have said that Atos is still to sell their Unified Communications & Collaboration (UCC) legacy activities, but no news is available on that till today. With the self-imposed deadline for the split in mid-2023, time is running out.
Question 3. Who are the investors?
Recently Airbus became known as having an interest in a minority stake in the Evidian perimeter and Atos has indicated it is actively discussing with other minority stakeholders in the new parts of the company. Interest in Evidian is obvious; this is the part of Atos with growth potential and contains the Coll parts like Data Analytics and Cyber Security.
But what about the Tech Foundation part; Atos themselves has indicated that this is the ‘problem child’ and it will take many years to be successful (if at all…). Although Tech Foundation will receive a sizeable investment injection, partly through the sale of its 30% stake in Evidian, it remains to be seen if investors appetite will still exist for this remaining part of Atos.
According to the presented plans we will see more announcements from Atos in the next months and a completion of the split details in the second part of 2023:
- The General Meeting of Atos shareholders
- The listing and distribution of Evidian shares
- The partial spin-off of 70% of Evidian to Atos shareholders (the remaining 30% to be kept by Atos Tech Foundation)
- The remaining 30% stake in SpinCo to be monetized to refinance part of TFCo’s turnaround costs
Certainly an exciting year for Atos. And for me I remain unconvinced that this split is the best way forward.
Disclaimer: Paul, who is the author of this blog post, holds at time of writing a small amount of stocks in Atos SE. All information in this blog post is believed to be public information, enriched with the authors personal opinion. No confidential information is being shared.