Billionaire Kretinsky’s Potential Biggest Tech Deal of 2023

Billionaire Kretinsky's Potential Biggest Tech Deal of 2023

Atos and Daniel Kretinsky: A Billion Dollar Acquisition with Mutual Benefits

Introduction

In a significant development, French technology firm Atos SE is currently in negotiations with Czech billionaire Daniel Kretinsky for the sale of its loss-making legacy operations. This massive deal, valued at $2 billion, has caught the attention of investors and industry experts alike. The potential acquisition holds promise for both parties involved, allowing Atos to focus on its core competencies in cybersecurity and cloud services while diversifying Kretinsky’s investment portfolio. In this article, we will delve into the specifics of this impending deal, the ramifications it could have, and the positive outlook it brings for both Atos and Kretinsky.

Atos’s Legacy Operations

Atos, known for its innovative technological solutions, has been burdened by its legacy operations, particularly the Tech Foundations business. This division, responsible for infrastructure management services, has negatively impacted the company’s financial performance. However, the sale of this division to Kretinsky’s EP Equity Investment (EPEI) vehicle presents a strategic opportunity for Atos to reduce its debt load and refocus on its core strengths in cybersecurity and cloud services. The sale is expected to generate €100 million in cash and reduce liabilities by €1.9 billion, providing Atos with much-needed financial stability.

Daniel Kretinsky’s Investment Strategy

Daniel Kretinsky, a renowned entrepreneur and investor, has been aggressively pursuing new business opportunities across Europe. His successful acquisitions in various industries, such as the retail chain Casino and the publishing division of Vivendi known as Editis, demonstrate his penchant for turning undervalued assets into thriving businesses. Kretinsky’s investment strategy aligns perfectly with his plan to acquire Atos’s legacy operations. By adding these assets to his diverse investment portfolio, Kretinsky aims to maximize value and drive long-term growth.

Atos’s Strategic Realignment

The sale of its legacy operations signifies a significant shift in Atos’s turnaround strategy. Previously, the company had planned to split into two separate entities. However, with this deal, Atos will continue operating its Tech Foundations division under its existing name, while the remaining assets, including the cybersecurity division BDS and supercomputers, will be rebranded as Eviden. This strategic realignment allows Atos to maintain a strong presence in its core areas of expertise while effectively managing its resources.

Fundraising for a Stronger Future

To further fortify its balance sheet and lower its leverage ratio, Atos plans to raise €900 million through a share sale and the sale of its legacy operations. As part of this fundraising effort, Kretinsky’s EPEI has reserved shares worth €180 million, securing a 7.5% stake in the newly formed entity, Eviden. The remaining shares, valued at €720 million, will be underwritten by leading financial institutions BNP Paribas and JP Morgan. This substantial infusion of funds will provide Atos with the necessary resources to consolidate its position in the market and drive future growth.

Benefits for Atos and Daniel Kretinsky

The potential acquisition of Atos’s legacy operations carries multiple benefits for both Atos and Daniel Kretinsky. For Atos, this deal allows the company to refocus on its core competencies, specifically cybersecurity and cloud services. By divesting itself of the loss-making legacy operations, Atos can significantly improve its long-term prospects for growth and profitability. Additionally, the reduction in debt and the strengthened financial position will provide Atos with greater stability and flexibility to pursue future opportunities.

On the other hand, this acquisition represents another strategic move by Kretinsky to expand his investment empire. By acquiring Atos’s legacy operations, Kretinsky adds valuable assets to his investment portfolio, contributing to his long-term investment plan. He has a proven track record of turning undervalued assets into successful businesses, and the potential value added from Atos’s legacy operations aligns perfectly with his investment strategy.

Market Response and Leadership Changes

The potential acquisition news has received a positive response from the market, with Atos’s share price increasing by 8 percent. This surge in the stock price reflects investor optimism regarding the company’s restructuring and future prospects. Notably, Atos’s stock price has experienced significant fluctuations in recent years, dropping from nearly 100 euros in late 2017 to around 10 euros before the announcement of the potential sale. The market’s positive response indicates renewed confidence in Atos’s trajectory under its new strategic direction.

In tandem with the restructuring efforts and the potential sale, Atos has also announced a change in leadership. After a year in her role, CFO Nathalie Senechault is leaving, with Paul Saleh stepping in as her replacement. This change in management reflects Atos’s commitment to driving constructive change and expansion as part of its ongoing strategic realignment.

Conclusion

In conclusion, the negotiation between Atos and Daniel Kretinsky for the potential sale of Atos’s legacy operations represents an important milestone for both companies. The sale will enable Atos to refocus its resources on its core competencies of cybersecurity and cloud services, whilst also reducing its debt burden and strengthening its financial position. Simultaneously, Kretinsky expands his investment portfolio and gains valuable assets to support his long-term investment plan. The market’s positive response to this potential acquisition indicates investor confidence in Atos’s strategic realignment and future prospects. Overall, both parties stand to benefit from the terms of this mutually advantageous agreement.

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