European aerospace conglomerate Airbus has canceled plans to acquire the Big Data and Security (BDS) business of French IT services company Atos just weeks after opening talks for a potential purchase.
Neither company offered any explanation for the sudden development. Instead, with brief statements, both Atos and Airbus made it known that negotiations on the sale were over.
Stocks collapse
“After careful consideration of all aspects of a potential acquisition of ATOS’s BDS (Big Data and Security) business line, Airbus has decided that it will not continue the discussions with ATOS regarding this potential transaction,” Airbus said.
Atos said yes I’m still analyzing the implications of Airbus’ decision and evaluating other options in line with “the sovereign imperatives of the French State”.
News on Airbus exiting the deal — valued between 1.65 and 2 billion dollars – shares of struggling Atos sent shares plunging 25% at one point on March 19. Since January 2, the company’s shares have fallen more than 70%, from 6.99 euros ($7.59 at current exchange rates) to 1.74 euros (about $1.89) at the close of trading on March 19. The crumbling deal also forced Atos to reschedule its 2023 earnings release to the “near future” while the company evaluated “strategic options.”
Atos’ $12 billion BDS business offers a range of cybersecurity, big data analytics, artificial intelligence and supercomputing capabilities. The company has close ties to the French government and military and is contracted to handle cybersecurity at this summer’s Paris Olympics. When news first emerged of Airbus’ plans to acquire Atos BDS, the planemaker described the move as something that could significantly accelerate its digital transformation initiatives and strengthen Airbus’ capabilities in cybersecurity and artificial intelligence.
Politically motivated?
But some are skeptical about the value Atos would bring to Airbus. They reportedly raised questions about whether the sale was politically inspired to ensure that Atos – with all its links to the French government – did not end up in the hands of a foreign buyer. A March 19 Reuters report quoted an investment banking analyst as saying the deal would be a “negative for Airbusgiven concerns that this may be a political deal and its negative impact on buyback potential.” In a report, Morningstar described some French lawmakers as trying to nationalize the BDS group to prevent acquisition by a foreign buyer.
This is the second time Airbus has backed out of 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 part.
At the time, an enthusiastic Atos described Airbus’ interest in becoming a “major shareholder” as a partnership that would accelerate Evidian’s growth while “guarantee technological sovereignty in France and Europe”, in cybersecurity, cloud and other advanced IT capabilities.
However, a year later, in March 2023, Airbus, in a short statement similar to the one released this week, canceled its investment in Evidian saying it wasn’t in line with the company’s goals. Then, as now, there was opposition to Airbus’s investment project for the same reasons. One of them, TCI Fund Management, a 3% shareholder of Airbus, called the proposed deal at the time “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 failure, Atos’ BDS group would have brought to Airbus capabilities that many consider critical to addressing growing cyber threats in the aviation and aerospace sectors. A recent report from Resecurity highlighted several cases where the main players in the industry, such as Boeing and Airbus, have become victims of ransomware attacks, data leaks and other incidents targeted by threat actors major airports in the world in cyber attacks.