With funds full and with a capitalization of 15 billion dollars, in 2017, the French Atos SE, through a series of major acquisitions, was looking with pretensions towards the top of the European technology market. THE current European Commissioner, Thierry Bretonwho headed Atos at the time, was proud of its strong balance sheet and celebrated the fact that he himself had led all those acquisitions, without even creating debt in the company.

And then, everything went wrong. Breton abandoned ship to join the EU, investors began to question Atos’ insatiable appetite for acquisitions and auditors discovered errors in the accounting books of American companies which he had purchased. All CEOs, as of 2021 (and there were many as they changed by six months), were talking about group dysfunction that was intensifying, as reported by Bloomberg

Now Atos faces $5.4 billion in debt. which he cannot repay. And this situation led it to give the French government a “golden” stake in its most strategic assets, in exchange for interim financing, while at the same time providing the state with a right of first refusal in a possible sale agreement.

This development is black spot for French President Emmanuel Macronwhose wish was for the world to see Paris to Europe’s Silicon Valley. The government forced to intervene for national security reasonsgiven the key role of Atos in the provision of technology services to France’s nuclear and defense sectors and cyber security in the context of this summer’s Olympic Games in Paris.

From high to low

The value of Atos has fallen to 226 million euros, recording dip 98% from highs reached in 2017. The company’s stock fell 14% on Tuesday to the announcement that it must halve its debt and the warning that a possible deal to avoid bankruptcy would lead to “significant erosion ” shareholder participation.

The French government’s participation in the company amounted to Rs of only 50 million euroswhile Atos managed to raise an additional amount of 400 million euros in mezzanine financing from a group of banks and bondholders.

Product of mega-merger

Atos itself is the result of a mega-merger overseen by Breton. When in 2010 Atos Origin announced the acquisition deal of the IT unit of Siemens, the CEO of the German company stated that a “European champion” would be created. Breton, for his part, estimated that this particular alliance created a “wide field of new activities.”

Other deals followed, such as French supercomputer company Bull and Zerox in 2014. Athese acquisitions propelled Atos to the French CAC 40 large-cap index in 2017, when its market capitalization skyrocketed.

The following year closed the largest acquisition dealas it acquired for 3.4 billion dollars the Syntec Inc aiming to gain greater access to financial clients in the US market.

And somewhere there the down ride started. A series of significant but sometimes “strange” failures has given rise to various insiders and observers to launch a campaign to destabilize the company, putting Atos in the target of short-sellers.

The company’s woes though began in January 2021, when the news that there was a takeover offer of the American DXC Technology Co. was on the table. for $10 billion sent the French company’s stock sharply lower, with investors wondering what would be the point of this particular agreement.

The problems worsened when auditors found accounting errors in two of Atos’ American subsidiaries, causing the company’s market cap to lose $1 billion in a single day. Follow another strange incidentwhen someone falsely claimed to own 5% of Atos when in fact they didn’t own a single share, reinforcing the belief that no one had a clue what was really going on at the company.

“I do not have an other choice”

As the stock continued to slide, Atos announced a spin-off plan, designed by McKinsey & Co. and supported by then president Bernard Meunier. The goal was to separate the problematic IT outsourcing unit from the promising cloud, big data and cyber security activities.

But and this plan failed. CEO Rodolphe Bellme, who opposed the plan, said he had “no choice but to resign” just five months after taking up his duties. Nevertheless, he presented the plan to a crowd of analysts and journalists who were confused by the developments, causing the stock to fall by 23%.

In the meantime, the discussions on the sale of the two units collapsed. Czech billionaire Daniel Kretinsky, who controls EPEI, ended talks in February, while Airbus SE last month pulled out of negotiations to buy the big data and cybersecurity units.

Disputes over strategy and a series of warnings about Atos’ profitability have created a steady succession of CEOs, with the current chief executive’s predecessor, Paul Saleh, leaving in just three months.

A drop in revenue as well

And customers, however, reacted negatively to Atos’ problems. The revenue is estimated as will amount to 6.9 billion euros this year from 11.3 billion euros sqthe year 2022.

Analysts point out that Atos, despite the acquisitions and mergers carried out by Breton, she wasn’t ready for the big move in the IT – cloud maintenance market, which fueled the growth of German competitor SAP SE.

O Breton however, he remains unrepentant.

“I have no responsibility, zero,” he said in Marchstressing that it left the company debt-free and well-positioned to take advantage of growth in the cloud sector.