Atos talks with EPEI to sell Tech Foundations business fall through

Deal with EPEI to sell its Tech Foundations business has fallen through, the French reseller giant reported in latest market update

Atos has announced its talks with EP Equity Investment (EPEI) to sell the Tech Foundations business have fallen through due to "deal terms and pricing not being mutually agreed upon".

In its latest market update, the company said it will continue to consider "strategic options" that are in best interest of its customers, employees, and shareholders.

An Atos spokesperson told CRN that Tech Foundations is still part of its asset divestment plan, however, for now the reseller will continue to run Tech Foundations and Eviden businesses as separate and "leverage the strengths of their respective offerings with a coordinated go-to-market strategy".

Atos first entered discussions with EPEI over a potential sale in August.

The market update also reported overall revenue growth of 0.4 per cent to €10.7bn with the Eviden business contributing a 2.9 per cent.

"Eviden is focused on high growth tech segments such as cybersecurity, digital platforms, etc," Atos said explaining the growth.

Tech Foundations, on the other hand, saw a drop of 1.7 per cent in organic revenue. This is a slight improvement from the Q3 results when Tech Foundations saw a drop of 7.2 per cent in organic revenue.

"By essence the Tech Foundations business is a decreasing one, which is requiring restructuring investment while having a strongly focused optimised portfolio," the French reselling giant said.

Reflecting lower working capital actions and higher reorganisation costs, Atos also reported a free cash flow of €-1.078bn in FY23.

Net debt was €2.2bn at year-end 2023 and consisted of cash, cash equivalent and short-term financial assets of €2.4bn and borrowings of €4.6bn.

The reseller remained within its borrowing covenant applicable to its banks financing, with a leverage ratio (net debt divided by pre-IFRS 16 OMDA) of 3.34 times at the end of December 2023 compared with the bank covenant of 3.75x.

Earlier this year, Atos revealed it was appointing Paul Saleh as its sixth chief executive in six years after "an intense period of transformation" under outgoing CEO Yves Bernaert.

Bernaert announced he was leaving "due to a difference of opinion on the governance to adjust and execute the strategy".