(Corrects 13th paragraph of Feb 3 article to say Elie Girard departed, not that he was ousted)

By Mathieu Rosemain and Julien Ponthus

PARIS (Reuters) – The French government holds the final keys to any move to buy the BDS cybersecurity division of France’s Atos, industry sources and analysts said, after French defence company Thales was reported to be devising a break-up plan.

Atos said on Thursday that its cybersecurity arm, BDS, was not for sale after sources told Reuters that Thales was working on a plan to buy the business, having approached private equity firms about exploring a joint offer and break-up.

Atos, formed partly by a string of acquisitions made under former CEO Thierry Breton, now EU industry chief and a former French finance minister, has deep links to France’s security world in which the state has the ultimate say over tie-ups.

Atos secures communications for the French military and secret services and manufactures servers to make supercomputers able to process troves of data for research or to develop the nascent artificial intelligence industry.

“The real question is about Atos future and that’s really a political one,” said Mikael Jacoby, who heads continental European sales trading at Oddo Securities.

“I think that issue will stay on investors’ mind even if in the short term there’s nothing to expect,” he added, saying that interest from clients had gone down after Thales denied considering a bid for the entire Atos group.

Atos shares fell around 7% on Thursday after rising 10% on Wednesday.

One of Atos’ oldest clients is France’s CEA, the country’s atomic energy commission, which it helped simulate nuclear missile tests. It also inherited confidential technology through the 2014 purchase of Groupe Bull, industry sources say.

It won a contract to help build a supercomputer in India, a country with which France has strengthened its partnership on defence and security.

“This is highly strategic and a matter of sovereignty,” said a source close to Atos, with the regards to the Indian contract. “Just like nuclear submarines.”


The biggest manufacturers of supercomputers servers are IBM and Hewlett Packard, both U.S.-based companies.

French President Emmanuel Macron has made the matter of ‘digital sovereignty’ a top priority as France presides the European Union until June. A ministerial conference on “building digital sovereignty in Europe” is scheduled early next week.

“We follow all French companies closely,” a spokesperson for the Finance Ministry said when asked about the situation at Atos, whose shares have lost half of their price over the last year following a string of setbacks that led to the departure of Breton’s successor, Elie Girard.

Thales has long coveted the cybersecurity assets of Atos, which it beat to the purchase of Gemalto in 2019, but whether it can find an agreed solution remains a puzzle, analysts said.

It said on Wednesday it would potentially be interested in any cybersecurity activities that were on sales, adding that no discussions were under way with Atos.

Cybersecurity is part of a cluster of sectors subject to extra government approval where foreign bidders are involved.

“If Thales wanted to bid for the whole of Atos as a French company and dispose of assets it did not want such as IT services, that would not pose a serious problem,” a senior French industry source said.

“Putting across an offer together with foreign funds and then breaking it up is a different discussion,” he added.

Thales ruled out any interest in the whole of Atos on Wednesday.

One of Thales’ two top investors is the French state, which is also its biggest customer. This situation makes the alternative of a hostile bid difficult to contemplate.

“Thales is the state and it is also Dassault, which would not go against the state,” the senior industry source said.

(Corrects 13th paragraph of Feb 3 article to say Elie Girard departed, not that he was ousted)

(Reporting by Mathieu Rosemain in Paris and Julien Ponthus in London; Additional reporting by Tim Hepher; editing by David Evans)