Atos Bids for Bull to Restore Computer Maker to Past Glory

Thierry Breton is taking a walk down memory lane.

The 59-year-old former finance minister of France, now chief executive officer of software maker Atos, is engineering a 620 million-euro ($846 million) bid to acquire Bull (BULL), the computer company he tried to revive two decades ago.

Once an icon of made-in-France technology, Bull has undergone 30 years of state-backed restructuring to go from making cash machines and microchips to selling software to customers such as Carrefour SA and the military. Now, Bull is venturing into cybersecurity and cloud-computing technology, developing gadgets such as 2,000-euro apiece smartphones offering voice encryption and secure access to the Web.

“The load of data our clients ask us to host doubles every 18 months -- that’s making our business a scale game,” Breton, who worked at Bull from 1993 to 1997, including as vice chairman, told a press conference in Paris yesterday.

Bull, founded in the 1930s, was named after Fredrik Rosing Bull, the Norwegian engineer who developed a punch-card device in 1919. It rivaled International Business Machines Corp. with its calculating machines that were the ancestors of today’s computers. However, after decades of bailouts, involving linkups with companies including General Electric Co. and Honeywell International Inc., France took it over in 1982.

Photographer: Hannelore Foerster/Bloomberg

Thierry Breton, chief executive officer of Atos SA. Close

Thierry Breton, chief executive officer of Atos SA.

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Photographer: Hannelore Foerster/Bloomberg

Thierry Breton, chief executive officer of Atos SA.

Motorola, NEC

The government later sold stakes in Bull to other computer companies. Bull raised funds in the mid-1990s from investors including Motorola Inc., NEC Corp. and Orange SA. (ORA) Under Breton, Bull acquired shares in Packard Bell through the sale of its holding in Zenith Data Systems to the U.S. computer maker.

Bull went on to receive more than 1 billion euros in state aid between 2001 and 2005, the year Breton moved on to become finance minister.

In its presentation detailing the proposed acquisition yesterday, Atos forecast revenue growth will be fastest in digital security and cloud. Still those businesses account for just 10 percent of the enlarged entity’s combined sales of about 10 billion euros. Consulting and systems integration -- Atos (ATO) helps customers such as banks and retailers to manage their communication systems -- still contribute more than a third of the group’s revenue. Atos’s consulting revenue shrank a 1.9 percent last quarter.

‘No Coincidence’

“It’s surely no coincidence that Breton picks a company he knows from the past,” said Heinz Steffen, an analyst at Fairesearch GmbH in Kronberg, Germany. “I see most growth from cybersecurity, which also has strong margins. Consulting won’t do quite as well.”

For Breton, who has led some of France’s largest companies including former electronics maker Thomson SA and phone carrier Orange, the bid for Bull comes weeks after Atos attempted to acquire Groupe Steria SCA (RIA), one of the country’s oldest computer-services providers.

Steria rebuffed the unsolicited proposal and said it would stick with a rival bid from Sopra Group SA. (SOP) Breton said yesterday Atos’s offer remains valid through June 27.

“It’s a totally separate subject from the Bull transaction,” Breton said, adding that he’s been working on the Bull bid for more than a year. “If Steria’s board accepts our offer, we’ll be happy to welcome them.”

Software companies such as Atos and Germany’s SAP AG are using acquisitions to expand in cloud computing, or software that allows data to be accessed remotely via the Web. The combination will strengthen Atos’s business in areas such as super-computing, the techniques used to analyze large amounts of data with complex mathematic algorithms, and cybersecurity.

Top Shareholders

Bull shares rose 1.4 percent to close at 4.96 euros in Paris, trading above Atos’s 4.90 euro-a-share bid. Atos slipped 0.8 percent to 63.72 euros, after climing 6.2 percent yesterday.

Crescendo Industries, a holding group co-founded by Bull CEO Philippe Vannier, is the largest shareholder with about 20 percent. Orange still owns about 8 percent, while France’s investment arm, Caisse des Depots et Consignations, has a 5 percent stake, according to data compiled by Bloomberg.

Owners of 24.2 percent of Bull’s shares have agreed to tender their stock, Atos said. The bid is recommended by both companies’ boards.

Sebastien Audra, an Orange spokesman, said the carrier will examine Atos’s offer, calling it “interesting and constructive for Bull’s future.”

Atos is paying 9 times Bull’s earnings before interest, taxes, depreciation and amortization, compared with 15 times for comparable transactions compiled by Bloomberg.

The takeover is expected to boost Atos’s earnings per share as early as the first year, and by more than 10 percent within two years of integration. Atos plans to remove Bull’s stock listing after the transaction, which is subject to it winning at least 50 percent plus one share of Bull’s capital.

Rothschild is the sole financial adviser for Atos. Paul Hastings LLP worked with Bull.

To contact the reporters on this story: Marie Mawad in Paris at mmawad1@bloomberg.net; Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Kenneth Wong, Ville Heiskanen

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