Friday, June 14, 2024

Jean-Pierre Mustier handed one of France’s messiest rescue missions


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A French paratrooper in his youth, Jean-Pierre Mustier has been parachuted in to handle the form of company minefield his dwelling nation appears adept at producing.

The previous UniCredit chief might face his greatest problem but as chair of IT companies group and navy contractor Atos following his predecessor Bertrand Meunier’s resignation final Monday. Mustier now has the prospect of offended minority shareholders, looming debt repayments, a bruised board and political opposition to a break-up plan concocted with Czech billionaire Daniel Křetínský — all below the watchful gaze of the French state.

“Whereas Mustier’s job shouldn’t be inconceivable, it’s a very tough process . . . and you might be compelled to decide. You’ll be able to’t kick the can down the street due to the liquidity difficulty, the funding disaster,” mentioned Chandramouli Sriraman, analyst at Stifel.

The sluggish demise of what was as soon as seen as a nationwide champion has gripped France’s enterprise and defence circles, who marvel how an organization whose supercomputers run fashions for the French nuclear arsenal may fall on such arduous instances.

Křetínský’s transfer to purchase the corporate’s legacy IT unit and a stake within the faster-growing huge knowledge enterprise has added a nationalistic twist to the saga, with rightwing lawmakers agitating over the sale of a holding in a delicate enterprise to a foreigner.

Shares in Atos, which has modified chief govt thrice in as a few years, have fallen 90 per cent previously three years to €4.68, giving the corporate a market valuation of €521mn.

“It has grow to be a political difficulty,” mentioned economist Jean-Hervé Lorenzi, lamenting “the mess” that an organization managing all of the IT for subsequent yr’s Olympic Video games in Paris “has been allowed to slip into”.

Mustier’s first process can be to evaluate whether or not he can salvage the rescue plan spearheaded by Meunier, who invited the previous Société Générale banker and fellow alumnus of elite engineering faculty École Polytechnique to hitch the board in Might. That deal entails promoting Atos’s lossmaking IT consulting unit to Křetínský, who has additionally agreed to inject money into the rebranded faster-growing supercomputing and cyber safety division Eviden through a capital elevating.

“If we don’t cut up, it’s like having conjoined twins and one among them is extraordinarily sick and also you resolve to kill each of them,” mentioned an individual near Atos. “There isn’t a good choice.”

Created within the Nineteen Nineties, Atos offered digital companies to corporations within the early web years. Beneath Thierry Breton, a former French finance minister who turned Atos CEO for a decade till 2019 and is now EU commissioner for inner markets, the corporate took on debt to fund acquisitions, reaching greater than €14bn in market worth. But it surely got here late to cloud computing, shopping for supercomputer maker Bull in 2014.

After Breton’s departure the group racked up setbacks together with the aborted buy of US IT companies agency DXC in 2021 and an accounting probe within the US. Enterprise has deteriorated since Atos unveiled the break-up plan final yr.

Křetínský in August agreed to take part in a €900mn capital increase for Eviden in alternate for a 7.5 per cent stake — a monetary contribution Meunier sought to assist meet Eviden’s capital wants and the €2.25bn in debt funds it faces in 2025. That a part of the deal, nonetheless, has drawn fireplace from shareholders, defence officers and politicians.

Křetínský reached the deal when Atos shares have been price round €15. If carried out now, the capital elevating can be far more dilutive and fewer interesting for present shareholders, who will vote on it at a gathering subsequent yr.

Czech billionaire Daniel Křetínský
A break-up plan concocted with Czech billionaire Daniel Křetínský has run into political opposition © David W Cerny/Reuters

Hedge fund CIAM and UDAAC, a grouping of small traders, have additionally accused Atos chair Meunier of deceptive and insufficient disclosures in lawsuits filed towards the corporate. One other small shareholder, Alix AM, has filed a grievance with France’s monetary prosecutor for “lively and passive corruption” within the deliberate transaction with Křetínský. Atos has “firmly” rejected the allegations.

“We’re glad that [Meunier] is gone . . . however Mustier is taking on the identical mission, so in the end, it’s a little bit of window dressing,” mentioned CIAM chief Catherine Berjal.

The prospect of Křetínský taking a stake within the division chargeable for Atos’s most delicate tech has additionally raised issues amongst authorities officers and politicians. “The speculation of such a strong, overseas participant getting nearer to our most delicate navy capacities deserves all our consideration,” centre-right lawmakers mentioned in a letter revealed in August.

Many consider Mustier will return to the drafting board. “Both the [shareholder vote] by no means occurs or it’s referred to as and the shareholders refuse the capital enhance,” mentioned Sophie Vermeille, a lawyer for UDAAC. “The one query is when Atos places in place a plan B.”

One particular person accustomed to the talks over the corporate’s future mentioned “Mustier . . . shouldn’t be going to take the slightest danger”.

Individuals near Křetínský’s aspect say he would gladly do with out the stake in Eviden, describing political criticism as a “thorn in our aspect”.

The Czech vitality tycoon, a fluent French speaker who began investing in France in 2018 and has impressed the Paris elite along with his data of French literature, has purchased writer Editis from Vivendi, invested in equipment retailer Fnac-Darty and is taking on meals retailer On line casino. However he offered a stake in newspaper Le Monde final month after a newsroom revolt.

Atos executives admitted final Monday that if the Křetínský deal fell by means of they would wish to search for different choices, together with asset gross sales, a share sale or issuing extra debt.

Defence teams Thales and Airbus have expressed an curiosity in Atos property, together with the cyber safety enterprise, in keeping with individuals near the matter. The federal government may flip to those corporations if it loses belief in Atos to deal with its navy actions, the individuals added.

An Atos cybersecurity centre for the Paris Olympics
An Atos cyber safety centre for the Paris Olympics © Pierre Philippe Marcou/AFP through Getty Pictures

In the meantime the blame sport has begun on Atos, with some pointing the finger at Breton. Critics, together with Meunier, say the previous finance minister pressed forward with acquisitions for the sake of progress.

In an interview with La Tribune final month, Meunier mentioned Breton’s acquisition technique had been “achieved with questionable or inadequate selectivity and the signing of contracts whose remuneration was too low in relation to prices”.

A former Atos worker near Breton hit again, saying it was Meunier’s erratic technique that had dragged down Atos, distracted its administration and led traders to lose belief within the group.

Meunier pushed to have the state take a stake within the firm to stabilise the shareholding however was rebuffed by the finance ministry and different officers, in keeping with an individual with data of the conferences. “They didn’t need to save Atos,” the particular person mentioned.

Meunier, Mustier, Atos and the French finance ministry declined to remark.

However some in Paris enterprise circles argue that Meunier, a former non-public fairness govt at PAI Companions and CVC, shares the blame after placing ahead turnaround plans which have foundered whereas shareholders grew annoyed by the falling share value.

“Meunier likes responsible Breton, however he left 4 years in the past,” mentioned CIAM’s Berjal. “He may have made higher decisions.”

For the particular person accustomed to talks over the corporate’s future, “Meunier inherited a tough state of affairs however didn’t deal with it nicely, and the home of playing cards fell down. That’s the story.”


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