France Seeks to Protect National Interests With Bid for Atos Cybersec

By offering to buy Atos big data and cybersecurity operations. Paris is trying to make sure key technologies do not fall under foreign control.

The government of Frances recent bid to acquire the big data and cybersecurity division of Atos for some $750 million is an indication of the financially beleaguered companys vital importance to the countrys defense interests.
Its a move that analysts say is about retaining domestic control over technology integrated into sensitive government, defense industrial base systems, supercomputers for simulating nuclear bomb tests, and a range of other critical infrastructure. Atos is also the primary
cybersecurity provider to the upcoming Olympic Games in Paris
.
The French government has similar stakes in multiple other entities such as Air France, Airbus, Renault, and aviation, space, and defense giant Safran. So, the move to invest in Atos is not unprecedented. Even so, it demonstrates the French governments keen interest in keeping information technology of strategic national security importance out of foreign hands.
Atos is a pivotal entity in France, says Morgan Wright, chief security advisor at SentinelOne: It has constructed the supercomputers for the nuclear-deterrent program, secured a 2019 contract to establish a big-data platform for the armed forces, and is a driving force in the development of the Scorpion combat-information system. Wright adds, the French governments [planned] acquisition of these assets [is] a strategic move to maintain control and prevent potential competitors from developing technology that could be used against the country or its allies.
Atos last week disclosed
that it had received what it described as a non-binding offer from the French government for its advanced computing, mission-critical systems and cybersecurity products businesses. Atos board of directors and the companys top management will discuss the $750 million offer, but there is no guarantee that negotiations will lead to a definitive agreement between both parties, the company said in the statement.
The nearly $12 billion Atos provides a wide range of information technology products and services worldwide. In recent years the company has struggled financially and has accumulated a debt load that currently stands at over $5 billion. Airbus earlier this year offered
between $1.65 billion and $2 billion
to buy Atos big data and cybersecurity business for between $1.65 billion and $2 billion — or more than twice what the French government has currently offered. But the aerospace giant
abruptly walked out of the deal
midway through discussions, tanking Atos already degraded stock values in the process. Some European analysts had perceived Airbus as acting as sort of proxy for the French government when it made the offer.
The French governments subsequent direct bid to buy Atos cybersecurity business is not entirely unsurprising in that context. Some in France had actually called for the government to
nationalize Atos
prompting a government denial.
Atos delivers critical services to multiple departments within the French government, some of which are highly critical or require a specific skill set or authorization — [like] top secret security clearance, says Luigi Lenguito, founder and CEO, BforeAI. Ensuring the know-how and workforce Atos has built, stays as consolidated as possible, is a primary concern, for the French government, he says.
In Europe, moves by the government to take a direct stake in companies deemed as providing critical value are not unusual, he says pointing to examples such as Air France and ITA (formerly Alitalia). Italys Leonardo SpA — which like Atos provides a wide range of IT and security services — is an example even within the technology realm, he notes. The Italian government currently holds a 30% stake in Leonardo.
This is not new; other large security organizations in Europe have some form of public golden share, as well, Lenguito says. These arrangements have already been established in other critical sectors like telecommunication and utilities.
In other cases, governments have used legislation limiting who can tender specific services, he says.
The chances of the US government stepping in to buy a stake in a critically important private sector IT or cybersecurity company are significantly lower. However, the government does have close oversight over foreign investments through the Committee of Foreign Investments in the United States (
CFIUS
), says SentinelOnes Wright.
China has been blocked several times from acquiring certain US companies for national security reasons, because of the technology they are involved with, he says, i.e.,
Huaweis blocked bid to become a top 5G infrastructure provider
for US telecoms. But for the federal government to buy a private cybersecurity company would be an exceptional circumstance, he notes.
It could happen in the US, but I think the company would have to be so strategic that the transfer of ownership to an adversarial interest would harm the national security of the country, he says.
Dave Gerry, CEO at Bugcrowd, says that while the government buying a cybersecurity provider isnt exactly commonplace in the US, there is some precedent for it reviewing what technologies and companies can end up being owned by foreign buyers. He too points to the role by the CFIUS in reviewing transactions that could impact a national security interest.
Recently, weve seen this play out in the non-cyber world when
Japans Nippon Steel attempted to acquire US Steel
, he says. In this case, it appears the French government has a strong reason to believe that Atos acquisition by a foreign buyer would jeopardize Frances national security interests.
Importantly, if the deal goes through, the French government will have a direct stake in a company that can help significantly bolster its technology and cybersecurity capabilities. It makes sense for the French government to upgrade its defenses, says Mike Janke, co-founder of DataTribe. For years, we have seen governments invest in critical companies through numerous means, but it has been rare for them to buy a company. Well see if this emerges as a trend.

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France Seeks to Protect National Interests With Bid for Atos Cybersec