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Atos to Hand Out Worldline Shares, Paving Way for More Deals

Marie Mawad, Aaron Kirchfeld and Ruth David

(Bloomberg) -- French tech company Atos SE is giving investors shares in its listed payments unit Worldline SA, paving the way for more deals at both businesses.

The computer-services provider will hand out 23.4 percent of its Worldline stake, valued at about 2 billion euros ($2.3 billion), Atos said in a statement Wednesday. Shares in Atos rose as much as 9.4 percent in early trading Paris on Wednesday, the most since July 2016. Worldline shares dropped just under 2 percent.

“This will free up more financial capacity at Atos for deals, and give Worldline more market liquidity,” Atos Chief Financial Offer Elie Girard said in a call with reporters. Bloomberg News had reported Tuesday that Atos was said to be considering giving shareholders a payment in the form of Worldline stock.

Atos currently has a 51 percent stake in Worldline, part of a complicated web of stakes among European payments companies. Atos spun out Worldline in 2014 via an initial public offering, and has steadily sold down its shareholdings. SIX Group AG became a major shareholder last year, acquiring a 27 percent stake, following the sale of its payment arm to Worldline.

The hand out by Atos will free up its balance sheet, giving the IT company more firepower to do acquisitions, Girard said. Atos has repeatedly stated it wants to see Worldline evolve as a standalone business that would consolidate the payments industry.

Atos is hosting investors and analysts at its headquarters near Paris to present its strategy for the coming three years, after it ended up cutting targets from its previous three-year plan in October. The company said at the time that growth was slowing and the global economic environment was becoming “more uncertain and challenging.”

Girard said Wednesday the company is bracing for a possible macroeconomic slowdown, but that would have only “marginal” impact on Atos thanks to recurring business in IT infrastructure. The company confirmed all 2019 targets that had been communicated in October.

Atos forecast annual revenue growth of 3 percent to 4 percent over the next three years, and operating margin of about 13 percent of sales by 2021. After Worldline is deconsolidated, Atos is forecasting annual growth of 2 percent to 3 percent and profitability of 11 percent to 11.5 percent by 2021.

The strategy detailed Wednesday is also an attempt to rekindle investor confidence. The stock is down 40 percent over 12 months, despite a streak of deals. Atos’s market capitalization of 8 billion euros ($9.15 billion) is half of French rival Capgemini SE’s, and firmly in the shadow of European software technology giant SAP SE’s 110 billion euros.

Presented at end-2016, Atos’s previous plan paved the way to further acquisitions and growth outside of its domestic market, including a $3.4 billion cash deal for U.S.-based Syntel Inc. It also targeted increased diversification into growing businesses, such as storing data in the cloud while keeping it safe.

The new plan includes changes in management. Worldline Chief Executive Officer Gilles Grapinet will no longer hold any role at Atos, where he was senior executive vice-president in charge of global functions. Atos will reduce its presence on Worldline’s board to three from five members, but its CEO, and former French finance minister, Thierry Breton, will remain non-executive chairman of Worldline’s board.

(Updated with detail on M&A, structure, shares.)

To contact the reporters on this story: Marie Mawad in Paris at mmawad1@bloomberg.net;Aaron Kirchfeld in London at akirchfeld@bloomberg.net;Ruth David in London at rdavid9@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Reed Stevenson

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