Deconsolidating Worldline: Atos gets ready for new age of digital transformation

At its 2016 Investor Day, Atos publicly set its course for the next three years, identifying digital transformation as the high-growth, high-value segment of the market on which it aimed to capitalize. The company then positioned itself as the digital services and payments leader in Europe and leveraged its Digital Transformation Factory (DTF) and e-payments subsidiary Worldline to shift its revenue mix to higher-value, next-generation solutions. Back in 2016 TBR predicted that Atos was making a smart move that was in line with industry trends. We expected that staying with its digital services and payments strengths as well as diversifying its geographic reach by expanding in North America would enable Atos to sustain revenue growth and improve profitability. Atos met its financial goals for 2018, and the company is now making a shift in its strategic direction. At its 2019 Investor Day, Atos updated its course for the next three years. While Atos will continue to expand in digital services, the payments services component will not be part of the equation as Atos is deconsolidating its e-payments subsidiary Worldline. Deconsolidating Worldline as a stand-alone listed pure play business is a logical move that will have an immediate positive effect and enable Atos to focus on its core digital services activities.

The big break: Separating Atos and Worldline

TBR believes Atos began to prepare Worldline to become a stand-alone business with the initial public offering (IPO) of Worldline in 2014. During the past four years, Worldline has operated as an Atos subsidiary and, as part of financial reporting, was one of Atos’ four divisions along with Infrastructure & Data Management (IDM), Business & Platform Solutions and Big Data & Cybersecurity. Worldline had its own CEO, leadership team, brand identity, strategy and financial goals, and the separation from Atos will not hinder the new company. With annual revenues of €2.2 billion (or $2.5 billion) and 11,500 employees, Worldline will continue to pursue its goal of becoming a leading payment services provider in Europe, especially after the acquisition of SIX Payment Services in May 2018. At its Annual General Meeting on April 30, Atos plans to submit a resolution to distribute to Atos shareholders 23.4% of Worldline’s share capital, out of the 50.8% currently owned by the Atos Group. After the transaction is complete, Atos will retain 27.4% of Worldline’s share capital, 26.9% will be held by SIX Group, and the balance of 45.7% will be free float shares.

As of May, Atos and Worldline will become two listed global pure play services providers specializing in digital services and payment services, respectively. TBR sees this split as inevitable as it enables both companies to individually pursue their goals utilizing their core expertise and gives them a targeted direction for their strategic activities. While the preparations to scale Worldline to a stand-alone company took several years, the Atos board was very quick to organize the separation process by establishing an ad hoc committee in December 2018 and announcing the decision on Jan. 30. As noted during the presentation, Atos and Worldline will maintain all existing partnerships “on an arm’s length basis,” pursuing a joint go-to-market strategy and continuing their industrial and commercial partnership.

 

 

Atos’ 2019 Investor Day was held at the company’s headquarters near Paris. The meeting was hosted by Atos Chairman and CEO Thierry Breton and key members of Atos’ executive leadership team. The company used the event to announce to the financial and industry analyst community its vision, strategy and three-year plan through 2021. The main message was that Atos is positioning as a trusted partner for clients’ digital journeys. Atos focuses on enabling customers’ digital businesses with secure, data-driven ecosystems and end-to-end, industry-specific services and technologies.