Atos 2019 Investor Day
Creation of 2 listed pure play global leaders through the distribution to Atos shareholders of 23.4% of Worldline's share capital
Launch of ADVANCE 2021, Atos' new three-year plan building on its reinforced global profile in digital services
2018 annual results[*]: acceleration
of organic growth in Q4
Bezons, January 30, 2019 - Today, Atos announces its project to distribute 23.4% of Worldline's share capital to Atos' shareholders leading to the creation of 2 listed global pure play leaders. As a consequence, while continuing their industrial and commercial partnership, Atos will reinforce its focus as a leading digital pure player and Worldline will benefit from an strengthened equity profile and enhanced ability to pursue consolidation opportunities.
During 2018, the Group completed two transforming acquisitions, Syntel, a € 0.9 billion revenue company in the digital services market, and SIX Payment Services, a € 0.5 billion revenue company in electronic payments. The change in size and business mix has led the Group to build a 3-year plan to the horizon of 2021 taking into account its new structure.
At the occasion of an Investor Day held today in its Headquarters in Bezons (France) the Group launches ADVANCE 2021, its new three-year plan, building on its reinforced global profile in digital services.
Thierry Breton, Chairman and CEO said: "In 2018, Atos strengthened its digital services global profile and capabilities with the acquisition of Syntel and enhanced Worldline's position as the undisputed payment leader in Europe through the acquisition of Six Payment Services. The project to distribute 23.4% of Worldline's share capital to Atos shareholders will create two pure play global leaders with increased strategic and financial flexibility.
With ADVANCE 2021, our new three-year plan, Atos will be well positioned to support its customers as they face the disruption created by the digital shockwaves and meet the challenge to securely manage and leverage the value of their data to create new business insights.
With that purpose, Atos will strengthen its customer centricity through a reinforced vertical go-to-market approach pulling through all of Atos' capabilities and mobilizing its people skills and key talents.
After deconsolidation of Worldline, Atos' three-year plan intends to create substantial value for all of its stakeholders over the next three years with a revenue organic growth CAGR reaching +2% to +3% CAGR, a profitability between 11% and 11.5% in 2021, and a free cash flow generation between 0.8 and 0.9 billion euros. With its increased financial flexibility, Atos will be very well positioned to participate in the consolidation of the industry, expand its customer base, and strengthen its key technological capabilities.
Without deconsolidation of Worldline, the plan would deliver a revenue organic growth CAGR between +3% and +4% over the next three years, a profitability at circa 13% in 2021 and a free cash flow reaching 1.2 to 1.3 billion of euros."
Project to distribute 23.4% of Worldline's share
capital to Atos' shareholders
Creation of 2 listed pure play global leaders
Atos to reinforce its focus as a leading digital pure player
Worldline to benefit from strengthened equity profile and enhanced ability to pursue consolidation opportunities
Atos and Worldline to continue their industrial and commercial partnership
On January 29, 2019, Atos' Board of Directors, following a specific governance process, proposed to submit to its shareholders the project to distribute in kind around 23.4% of Worldline's share capital, out of the 50.8% currently owned by the Group. Post transaction, Atos would retain approximately 27.4% of Worldline's share capital and Worldline's free float would be increased to approximately 45.7%. Following the partial distribution, Worldline is expected to be deconsolidated from the Group's accounts and Atos remaining stake would be accounted for as a financial asset.
A specific governance process was set up by the Atos' Board of Directors to study the feasibility of this project and of other strategic options, with the creation of an ad hoc committee comprising the independent directors and the Chairman of the Board. The ad hoc committee met several times and, assisted by its financial advisors Goldman Sachs Paris Inc. et Cie and d'Angelin & Co., formulated recommendations to the Board of Directors in favor of this project.
Worldline's Board of Directors met on January 29, 2019 and unanimously welcomed this planned change in ownership structure.
This project comes at a time when Atos has completed its global profile, capabilities and geographical footprint with the acquisition of Syntel. Consistent with the priorities highlighted in the 2019-2021 strategic plan, the proposed distribution of Worldline shares would reinforce the Group's focus as a leading listed digital player and increase its strategic flexibility, thereby allowing Atos to further amplify growth and value creation as the digital landscape accelerates. Atos' shareholders would also directly benefit from the value creation potential of Worldline shares distributed as part of this project.
Similarly, Worldline has also scaled up significantly over the course of 2018. With the acquisition of SIX Payment Services, Worldline can now pursue an independent standalone strategy as the undisputed payment leader in Europe, delivering strong revenue growth, profitability and sustainable cash flow generation. In a backdrop of continued consolidation in the European payment market, the proposed transaction is expected to increase Worldline's strategic flexibility. Worldline would also benefit from a strenthened equity capital markets profile as a result of its increased free float and liquidity.
The relationship between the two groups will remain strong. Atos would propose to reinforce its industrial and commercial partnership with Worldline and maintain all the existing partnerships on an arm's length basis through the creation of the Atos-Worldline Alliance. This Alliance would notably comprise a joint go-to-market strategy and R&D cooperation and would also combine innovation in digital and payment services as well as talent pools and networks.
Atos would also continue to participate in Worldline's governance, with reduced representation of Atos from 5 to 3 Board members consistent with its reduced ownership level. The Board of Directors of Worldline also announced that Thierry Breton will remain non-executive Chairman of Worldline's Board of Directors and Gilles Grapinet, Chief Executive Officer of Worldline. It has been decided that Gilles Grapinet will no longer hold any function within Atos as of February 1st, 2019. Finally, the shareholders' agreement between Atos and SIX will be amended to reflect the continued partnership between the two groups post distribution, and both parties are expected to commit to a 6 month joint lock-up on their respective stakes in Worldline post distribution.
Regarding the structure of the proposed distribution, Atos' shareholders are expected to receive 2 Worldline shares for 5 Atos shares held. Technical terms of the proposed transaction are under review and would be submitted to the vote of the Atos shareholders at the 2018 Annual General Meeting planned on April 30, 2019. Due to the planned date of the Annual General Meeting, the ex-date and the payment date of the proposed distribution in kind and of any ordinary dividend that could be proposed by the Board of Directors and approved by the Annual General Meeting would be expected to be in the first half of May 2019. At current Worldline share price levels, circa half of the value distributed to Atos' shareholders should be qualified as a partial repayment of share capital which, under French tax law, is not taxable at the level of French tax resident Atos' Shareholders and does not trigger French withholding tax when paid to non French tax resident Atos' shareholders.
Atos will immediately initiate the appropriate processes with the relevant works councils' representatives in accordance with applicable laws.
Further announcements will be made in due course.
ADVANCE 2021: Atos' new three-year plan
building on its new global profile in digital services