A French paratrooper in his youth, Jean-Pierre Mustier has been parachuted in to manage the kind of corporate minefield his home country seems adept at producing.
The former UniCredit chief may face his biggest challenge yet as chair of IT services group and military contractor Atos following his predecessor Bertrand Meunier’s resignation last Monday. Mustier now has the prospect of angry minority shareholders, looming debt repayments, a bruised board and political opposition to a break-up plan concocted with Czech billionaire Daniel Křetínský — all under the watchful gaze of the French state.
“While Mustier’s job is not impossible, it is a very difficult task . . . and you are forced to make a decision. You can’t kick the can down the road because of the liquidity issue, the funding crisis,” said Chandramouli Sriraman, analyst at Stifel.
The slow demise of what was once seen as a national champion has gripped France’s business and defence circles, who wonder how a company whose supercomputers run models for the French nuclear arsenal could fall on such hard times.
Křetínský’s move to buy the company’s legacy IT unit and a stake in the faster-growing big data business has added a nationalistic twist to the saga, with rightwing lawmakers agitating over the sale of a holding in a sensitive business to a foreigner.
Shares in Atos, which has changed chief executive three times in as many years, have fallen 90 per cent in the past three years to €4.68, giving the company a market valuation of €521mn.
“It has become a political issue,” said economist Jean-Hervé Lorenzi, lamenting “the mess” that a company managing all the IT for next year’s Olympic Games in Paris “has been allowed to slide into”.
Mustier’s first task will be to assess whether he can salvage the rescue plan spearheaded by Meunier, who invited the former Société Générale banker and fellow alumnus of elite engineering school École Polytechnique to join the board in May. That deal involves selling Atos’s lossmaking IT consulting unit to Křetínský, who has also agreed to inject cash into the rebranded faster-growing supercomputing and cyber security division Eviden via a capital raising.
“If we don’t split, it’s like having conjoined twins and one of them is extremely sick and you decide to kill both of them,” said a person close to Atos. “There is no good option.”
Created in the 1990s, Atos provided digital services to companies in the early internet years. Under Thierry Breton, a former French finance minister who became Atos CEO for a decade until 2019 and is now EU commissioner for internal markets, the company took on debt to fund acquisitions, reaching more than €14bn in market value. But it came late to cloud computing, buying supercomputer maker Bull in 2014.
After Breton’s departure the group racked up setbacks including the aborted purchase of US IT services firm DXC in 2021 and an accounting probe in the US. Business has deteriorated since Atos unveiled the break-up plan last year.
Křetínský in August agreed to participate in a €900mn capital boost for Eviden in exchange for a 7.5 per cent stake — a financial contribution Meunier sought to help meet Eviden’s capital needs and the €2.25bn in debt payments it faces in 2025. That part of the deal, however, has drawn fire from shareholders, defence officials and politicians.
Křetínský reached the deal when Atos shares were worth around €15. If carried out now, the capital raising would be much more dilutive and less appealing for existing shareholders, who will vote on it at a meeting next year.
Hedge fund CIAM and UDAAC, a grouping of small investors, have also accused Atos chair Meunier of misleading and inadequate disclosures in lawsuits filed against the company. Another small shareholder, Alix AM, has filed a complaint with France’s financial prosecutor for “active and passive corruption” in the planned transaction with Křetínský. Atos has “firmly” rejected the allegations.
“We are glad that [Meunier] is gone . . . but Mustier is taking up the same project, so ultimately, it’s a bit of window dressing,” said CIAM chief Catherine Berjal.
The prospect of Křetínský taking a stake in the division responsible for Atos’s most sensitive tech has also raised concerns among government officials and politicians. “The hypothesis of such a powerful, foreign player getting closer to our most sensitive military capacities deserves all our attention,” centre-right lawmakers said in a letter published in August.
Many believe Mustier will go back to the drawing board. “Either the [shareholder vote] never happens or it is called and the shareholders refuse the capital increase,” said Sophie Vermeille, a lawyer for UDAAC. “The only question is when Atos puts in place a plan B.”
One person familiar with the talks over the company’s future said “Mustier . . . is not going to take the slightest risk”.
People close to Křetínský’s side say he would gladly do without the stake in Eviden, describing political criticism as a “thorn in our side”.
The Czech energy tycoon, a fluent French speaker who started investing in France in 2018 and has impressed the Paris elite with his knowledge of French literature, has bought publisher Editis from Vivendi, invested in appliance retailer Fnac-Darty and is taking over food retailer Casino. But he sold a stake in newspaper Le Monde last month after a newsroom revolt.
Atos executives admitted last Monday that if the Křetínský deal fell through they would need to look for other options, including asset sales, a share sale or issuing more debt.
Defence groups Thales and Airbus have expressed an interest in Atos assets, including the cyber security business, according to people close to the matter. The government might turn to these companies if it loses trust in Atos to handle its military activities, the people added.
Meanwhile the blame game has begun on Atos, with some pointing the finger at Breton. Critics, including Meunier, say the former finance minister pressed ahead with acquisitions for the sake of growth.
In an interview with La Tribune last month, Meunier said Breton’s acquisition strategy had been “achieved with questionable or insufficient selectivity and the signing of contracts whose remuneration was too low in relation to costs”.
A former Atos employee close to Breton hit back, saying it was Meunier’s erratic strategy that had dragged down Atos, distracted its management and led investors to lose trust in the group.
Meunier pushed to have the state take a stake in the company to stabilise the shareholding but was rebuffed by the finance ministry and other officials, according to a person with knowledge of the meetings. “They didn’t want to save Atos,” the person said.
Meunier, Mustier, Atos and the French finance ministry declined to comment.
But some in Paris business circles argue that Meunier, a former private equity executive at PAI Partners and CVC, shares the blame after putting forward turnaround plans that have foundered while shareholders grew frustrated by the falling share price.
“Meunier likes to blame Breton, but he left four years ago,” said CIAM’s Berjal. “He could have made better choices.”
For the person familiar with talks over the company’s future, “Meunier inherited a difficult situation but did not handle it well, and the house of cards fell down. That’s the story.”
