European aerospace conglomerate Airbus has cancelled plans to acquire French IT services company Atos’ Big Data and Security (BDS) business just weeks after opening negotiations for a potential purchase.
Neither company offered any explanation for the sudden development. Instead, in brief statements, both Atos and Airbus disclosed that discussions on the sale had ended.
Shares Plunge
“After careful consideration of all aspects of a potential acquisition of ATOS’ BDS (Big Data and Security) business line, Airbus has decided it will no longer pursue discussions with ATOS about this potential transaction,” Airbus said.
Atos said it was still analyzing the implications of Airbus’ decision and evaluating other options that align with “the sovereign imperatives of the French state.”
News of Airbus walking away from the deal — valued between $1.65 billion to $2 billion — sent shares of the troubled Atos spiraling downward on March 19 by 25% at one point. Since Jan. 2, the company’s shares have fallen over 70% from €6.99 ($7.59 USD at current exchange rates) to €1.74 (around $1.89 USD) at close of trading March 19. The crumbling deal also forced Atos to reschedule its 2023 earnings release to the “near future” while the company evaluated “strategic options.”
The $12 billion Atos’ BDS business delivers a range of cybersecurity, big data analytics, artificial intelligence, and supercomputing capabilities. The company has close ties to the French government and military and has a contract to manage cybersecurity at this summer’s Olympics in Paris. When news first surfaced of Airbus’ plans to acquire Atos BDS, the aviation builder described the move as something that could significantly accelerate its digital transformation initiatives and bolster Airbus’s capabilities in cybersecurity and AI.
Politically Motivated?
But some have been skeptical of the value that Atos would bring to Airbus. They have reportedly raised questions about whether the sale was politically inspired to ensure that Atos — with all its connections to the French government — wouldn’t land in the lap of a foreign buyer. A Reuters report on March 19 quoted an investment banking analyst as saying the deal would have been a “negative for Airbus, given concerns that this might be a political deal, and its negative impact on buyback potential.” In a report, Morningstar described some French lawmakers as seeking to nationalize the BDS group to prevent a takeover by a foreign buyer.
This is the second time that Airbus has backed off from buying a stake in Atos’ cybersecurity business. In 2022, the European aerospace giant announced plans to acquire a 29.3% minority stake in Atos’ Evidian cybersecurity business, of which BDS is a part.
At the time, an enthusiastic Atos described Airbus’ interest in becoming an “anchor shareholder” as a partnership that would accelerate Evidian’s growth while “ensuring technological sovereignty in France and in Europe,” in cybersecurity, cloud, and other advanced computing capabilities.
However, a year later in March 2023, Airbus, in a brief statement similar to the one it issued this week, called off the Evidian investment saying it did not align with the company’s goals. Then, as now, there was opposition to Airbus’ planned investment on the same grounds. One of them, TCI Fund Management, a 3% stakeholder in Airbus, called the proposed deal at the time as “value destructive” for Airbus. TCI Fund also expressed concern that the investment was at least partially politically motivated.
Regardless of the reasons for the deal’s collapse, Atos’ BDS group would have brought capabilities to Airbus that many see as critical to address skyrocketing cyber threats in the aviation and aerospace sectors. A recent report by Resecurity highlighted several instances where major players in the sector, such as Boeing and Airbus, became victims of ransomware attacks and data leaks and other incidents where threat actors targeted major airports worldwide in cyberattacks.
Source: www.darkreading.com