Orange and Thales will they launch a takeover bid on Atos? : Stock market advice

90 will probably be a year to forget for Atos, the stock having melted from half since January 1, at the time of this writing. It must be said that the French high-tech giant (cybersecurity, big data, infrastructure, etc.) has experienced a real descent into hell over the year, punctuated by repeated disappointments. However, everything has a price, and the action has become very inexpensive , in the opinion of many stakeholders. It is also that of Thomas Alzuyeta, manager at Kirao Asset Management, interviewed by Capital.

If the management company says it has long preferred Capgemini to Atos, mainly because of its activities considered with higher added value (consulting, etc.), the large gap between the two listed companies on the valuation multiples front (their degree of high cost on the stock market) currently militates in favor of Atos. “ Atos is inexpensive to pay currently. The growth dynamic in turnover is weaker than before due to the infrastructure activity (servers) under pressure (new players, such as Amazon, constitute formidable competition). However, the infrastructure branch, the main problem of the group, only represents a fifth of turnover. And the rest of the business should remain well oriented. In particular, there are activities representing 2 to 3 billion euros in turnover (on 10 billions) which are very dynamic ”, underlines Thomas Alzuyeta.

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Atos is undervalued on the stock market… and could attract predators

Assuming that Atos puts “2 billion euros on the table to resolve (by restructuring, disposals…) the problem constituted by the infrastructure pole, the group would then pay itself 7 times its expected operating profit ”, judge Thomas Alzuyeta. Under these conditions, a minimum theoretical target of 50 euros (much higher than the current price of 36 euros, to 16 December) would be possible, according to him. In this regard, in the event of a takeover bid launched on Atos , a predator would quickly recover its costs, on the basis of a price of offers 50-60 euros, estimates the manager.

Orange and Thales interested in Atos?

Orange or Thales are shown ‘ potential buyers , as they would presumably be i ninterested in the cybersecurity pole (a niche where they themselves are very advanced) of Atos. A promising profession. So much so that Atos “often makes acquisitions dedicated to a multiple of 2 to 3 times the target’s turnover! A multiple which confirms the idea that Atos is globally undervalued on the stock market, due to the high theoretical value of many of its assets … The cybersecurity part of Atos, which represents 15% at 20% of turnover, should probably be worth in theory 15 times the operating profit ”, judges Kirao Asset Management in this regard. “Orange could also covet the group’s data centers”, adds the manager.

While some French players could set their sights on Atos, Thomas Alzuyeta considers a purchase offer unlikely from foreign activist funds, as the government would likely take a dim view of such an offensive. Many Atos activities are indeed considered strategic by France.

A new leader expected at the turn

Atos also enjoys good financial health, with almost no financial debt. A new leader will arrive in January. “He should tackle the problems of Atos and work on its revaluation on the stock market. The restructuring / divestiture work on the infrastructure division should be a long-term job, but it will probably be appreciated by equity investors. The new leader should be judged in the first half of the year on his desire to improve Atos’ business profile, ”warns Thomas Alzuyeta. Thus, if Atos constitutes a priori a buying opportunity at the current price level, the new manager is expected at the turn by the financial community …

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