FT : Daniel Křetínský in talks to buy unit of ailing French tech group Atos

Daniel Křetínský in talks to buy unit of ailing French tech group Atos
Paris has been closely following restructuring efforts of group that provides information systems for military

Czech billionaire Daniel Křetínský is in talks to buy Atos’s lossmaking IT services unit, as the French technology group tries to trim its debt and draw a line under long-running restructuring efforts. 

The offer by Křetínský follows a recent buying spree in France, including indebted supermarket group Casino. Armed with a windfall from his assets in gas and coal, the billionaire has also snapped up stakes in British retailer J Sainsbury and Germany’s Metro. 

The proposed deal, which splits the group into two, would see Křetínský plough more than €1bn into the takeover. This includes €100mn of cash for the operations and a further €800mn in funds to recapitalise the business, and more than €200mn to take a 7.5 per cent in the remaining listed Atos unit, set to be renamed Eviden, according to the company and people close to the talks. 

The exclusive discussions come after more than six months of negotiations, and caps various attempts to stem the company’s share price decline. Atos has been embroiled in governance turmoil amid a rapid succession of management as well as losses in some of its divisions. 

Atos also provides secured information systems for the French military and its restructuring efforts had been closely followed by the country’s government, according to people close to the talks. The company’s supercomputing business, big data and cyber security assets are highly prized and will now be part of Eviden.

An agreement with Křetínský will put an end to an attempt by Atos to split itself into two listed vehicles. Complex talks over the restructuring had at one point involved Airbus, which had bid for a 30 per cent stake in Eviden. Airbus walked away following pressure from hedge fund manager Chris Hohn, who had called it a bailout of Atos. 

“This (new proposal) is essentially the planned split, just through other means,” a person close to the talks said.

Atos and Křetínský’s EP Equity Investments said a deal for Tech Foundations, which had revenues of €5.4bn last year and centres its business around IT consulting, would give it an enterprise value of €2bn, based on a cash injection of €100mn and €1.9bn in liabilities. 

Restructuring costs at the unit, including planned redundancies among staff that now stand at 52,000, had contributed to deepening operating losses of €434mn across Atos as a whole in the first half of 2023. That had sent its shares tumbling 20 per cent last Friday. They were up about 5 per cent in early afternoon trading on Tuesday. 

Atos’s market capitalisation stands at more than €1bn, and its shares have lost nearly 75 per cent of its value over the past two years. Its net debt stood at €2.3bn at the end of June. 

Křetínský’s offer also includes acquiring the Atos brand, and he is expected to rename Tech Foundations accordingly.

The rest of Atos will be rebranded Eviden and the company is planning a €900mn capital increase, which will include an investment from Křetínský’s vehicle, the company said.

In a statement, Křetínský said a deal acquisition, which would include data centres, was “a great opportunity for us to invest in large-scale European IT infrastructure”.

“If [Křetínský] succeeds in turning it around, it’s a pretty good deal,” said another person close to the discussions.

Eviden aims to halve its leverage ratio to about twice its operating income by the end of 2025. 

Following several debt-backed acquisitions, Atos has had a series of setbacks in recent years, after reporting accounting errors in the US in 2021 and abandoning a $10bn bid for US rival DXC Technology that year.

FT : Raiffeisen Bank boosts pay for Russian staff by €200mn

Raiffeisen Bank boosts pay for Russian staff by €200mn
Bumper increase in past six months doubles staff costs for largest western lender still operating in country

Raiffeisen Bank increased pay for its Russia-based staff by €200mn in the past six months even as the Austrian lender comes under increasing pressure to leave the country.

The move by the bank, which is the largest western lender still operating in Russia, represents a doubling in staff costs in its subsidiary compared with the same period in 2022. The raise is equivalent to a €22,000 payout per employee.

Raiffeisen said the increase was “a result of higher salaries and social security costs, provisions for one-off payments and an increase in headcount”.

Headcount at the division increased less than 10 per cent.

Raiffeisen declined to provide further details.

The increase in pay for Russian staff alone represents a rise in overall group staff costs for Raiffeisen — one of the biggest lenders in central and eastern Europe — of more than 20 per cent, despite the division in the country representing less than a fifth of the company’s 45,000 staff.

Raiffeisen also operates in Ukraine. Staff costs there were flat.

The bank, which has particularly strong ties with Austria’s ruling conservative Peoples’ Party, this year pledged to accelerate plans to leave Russia, even as its operations there bring in outsized profits.

The bank is in the sights of US authorities thanks to its Russian exposure: the US Treasury department has requested thousands of documents from the bank to check its compliance with sanctions against Moscow.

“We continue to work at full speed on two options for our business in Russia: a sale and a spin-off.

“While we are working on these complex options, we are consequently continuing to reduce the business in Russia,” said chief executive Johann Strobl on Tuesday, as he presented the bank’s results for the first half of the year.

Profits at Raiffeisen’s Russian business rose 9.6 per cent to €867mn in the first six months of the year, topping an already record-beating profit in the first half of last year as the invasion of Ukraine began.

However, overall Raiffeisen’s group profits dropped 24 per cent year-on-year, reflecting tougher business conditions elsewhere in eastern Europe.

Critics accuse the bank, which has decades of history in Russia and a previously beneficial record of waiting out political criticism of it, of not being serious about winding down its Russian operations.

But like many western businesses, it finds itself in a tricky situation in Russia, where there are few options available for an easy exit, let alone one that delivers value for shareholders.

Raiffeisen cannot repatriate any of the huge profits its Russian business is currently earning. The bank has also reduced its Russian loan book by more than a third since the war began.

This year the bank explored a possible “asset swap” with Russia’s Sberbank, which had about €400mn of assets marooned in Europe.

The proposals did not make it off the drawing board, however, thanks to intense political pressure.

The bank subsequently began negotiations with two Russian counterparties to sell its arm in the country. However political turbulence in Russia and a further tightening of government restrictions on western businesses has all but frozen those talks.

FT : Uber makes first operating profit after racking up $31.5bn of losses

Uber makes first operating profit after racking up $31.5bn of losses
Ride-hailing company reaches long-awaited landmark after years of heavy spending

Uber reported its first operating profit on Tuesday on the back of better control of costs, marking a turning point for the chronically lossmaking company after years of heavy spending in a controversial dash for growth.

The long-awaited landmark in the ride-hailing company’s finances came after it had racked up a total of $31.5bn in operating losses since 2014, the first year for which it disclosed details of its finances.

Uber had previously undergone one of the most ambitious global expansions undertaken by a tech start-up, tapping mountains of cheap capital to subsidise rides and grab market share. The aggressive push involved it flouting taxi regulations in many countries and, to critics, made Uber a byword for Silicon Valley arrogance in the cheap-money decade between the financial crisis and the pandemic.

“For most of our history profitable wasn’t the first thing that came up when you asked someone about Uber,” CEO Dara Khosrowshahi admitted on a call with analysts. “In fact, many observers over the years boldly proclaimed that we would never make any money.”

“The easy availability of capital over the past decade obscured the poor unit economics of many businesses,” the Khosrowshahi added. But he claimed that was never true of Uber, even as it burnt through cash in its efforts to take the lion’s share of the new ride-hailing market and force smaller rivals to retreat.

Uber’s financial turnround has come on the back of a rebound in demand for ride-hailing following the pandemic and a successful expansion into food deliveries. Under Khosrowshahi, who stepped in six years ago when co-founder Travis Kalanick was forced out over a series of scandals, the company has also raised prices and acted aggressively to rein in costs, bolstering its profit margins.

Uber has reported after-tax profits in several quarters before, though only thanks to gains on disposals or revaluations of its equity investments.

By contrast, for the second quarter of this year, it reported $326mn in pre-tax earnings from its operations, a turnaround from the operating loss of $713mn suffered a year before. Khosrowshahi said the company’s move to profitability, as well as its quarterly free cash flow of more than $1bn, reflected “disciplined execution, record audience and strong engagement.”

Despite finding more stable financial footing, Uber’s latest figures continued to reflect the effects of the price wars that have long characterised the ride-hailing and food delivery businesses. Price cuts earlier this year by its struggling US rival, Lyft, ate into the growth of Uber’s ride-hailing business in the latest quarter.

Meanwhile, competition with delivery company DoorDash weighed on growth in the delivery business, leading Uber to fall short of Wall Street forecasts with revenue growth of 14 per cent in the latest quarter, to $9.23bn.

However, steady growth in demand for Uber’s services, even as prices have risen, has underpinned Wall Street’s confidence in the durability of Khosrowshahi’s turnround and brought a 90 per cent rise in its stock price over the past year, despite a near-6 per cent fall on Tuesday.

Uber also issued a stronger forecast than expected for its current quarter. It predicted that earnings before interest, taxes, depreciation and amortisation would reach $975mn to $1.025bn, compared with a Wall Street estimate of $915mn. Its bookings forecast of $34bn to $35bn was above the $33.9bn predicted by analysts.

Along with unrealised gains on investments, Uber reported a profit of $394mn for the quarter, or 18 cents a share, compared with a loss of $2.6bn the year before. Analysts had been expecting a loss of 1 cent a share for the period.

FT :Uniper’s chief vows to deliver a ‘good return’ for Berlin after state rescue

Uniper’s chief vows to deliver a ‘good return’ for Berlin after state rescue
Michael Lewis tells the FT the German gas importer has drawn lessons of over-reliance on Russian gas

Nationalised German gas importer Uniper has vowed to learn from its disastrous over-reliance on Russian gas as it unveiled an €8bn green overhaul aimed at putting it on a path to environmental and financial stability.

Chief executive Michael Lewis used his first interview since taking up his role in June to draw a line under its previous dependence on Gazprom, which led to a government bailout as the company wracked up €19bn in losses after Vladimir Putin, Russia’s president, cut gas supplies to Europe last year.

“Were we too reliant on Russian gas? It turned out yes,” Lewis told the Financial Times.

The 56-year-old Briton added: “It is important to have diversity. There’s no question about that. And that’s one thing the crisis has brought home to us loud and clear.” The company now imports a mixture of pipeline gas and LNG from suppliers in the Netherlands, the US, Norway, Australia and Azerbaijan.

After Putin’s full-scale invasion of Ukraine, Uniper became an ill-fated symbol of the over-reliance of Europe’s largest economy on Moscow, with the industrial nation importing more than half of its gas from Russia. As well as being pushed to the brink of collapse by Putin’s decision to cut gas supplies to Europe, Uniper lost control of its Russian subsidiary Unipro, which the Kremlin expropriated in April, in the first in a wave of seizures of western assets.

Lewis, who was previously chief executive of the utility Eon UK, promised to generate a “good return on investment” for the German government. Berlin injected €13.5bn in equity for a 99 per cent stake and granted the company €6bn in loans, in one of the biggest corporate bailouts in German history.

Uniper enjoyed what it called “exceptionally” good results in the first half of 2023, with earnings before interests and taxes of €3.7bn, compared with a €757mn loss in the same period last year, thanks to favourable gas market conditions and a successful hedging strategy.

The company stressed the record performance was unlikely to be repeated. But German government officials say their ultimate aim is to make a profit on the investment, akin to the €760mn gain it made last year on its rescue of Lufthansa during the coronavirus pandemic.

Lewis said he was “confident” the company could achieve that goal thanks to an €8bn plan to make the fossil fuel group greener.

The German government, which is required under EU state-aid rules to reduce its stake in Uniper to 25 per cent by 2028, is expected to set out a strategy for exiting the company by the end of the year.

Uniper, which operates power stations in Germany, the UK, Sweden and the Netherlands, on Tuesday brought forward its target date for carbon neutrality from 2050 to 2040.

It pledged to exit coal-fired power generation in 2029, eight years earlier than planned, as well as decarbonising other existing assets and building new ones.

Lewis he saw an opportunity for Uniper to provide a missing piece to the energy transition by generating “flexible green power” as a back up to wind and solar. As well as developing 1GW of hydrogen electrolysis capacity by 2030, it plans to import environmentally-friendly fuels such as green hydrogen and biomethane.

The plans were met with scepticism by environmental campaigners, who oppose the government’s plan to use gas as a “bridging” fuel towards carbon neutrality, which Berlin has set itself to achieve by 2045.

Sonja Meister, an energy campaigner at German NGO Urgewald, described the strategy as “a step in the right direction” by a company that had long been an environmental laggard. But she questioned its plans to continue to rely heavily on natural gas and said more detail was needed on how it would meet its new targets.

Analysts were also circumspect about the CEO’s claim that environmental and financial performance would go hand in hand. “There’s reason to be cautious,” said Ingo Becker, head of utilities sector research at the brokerage Kepler Cheuvreux. “The returns on such investments are unknown and you will not get proper state support schemes for every euro you invest so clearly there is some entrepreneurial risk.”

Lewis cautioned the company — as well as Germany and Europe more broadly — was undergoing a “transition” rather than a “revolution”.

Uniper is planning legal action against Moscow for the expropriation of its Russian subsidiary, he added, while admitting that the chances of recovering any of the lost value were slim. But he said it was “our duty to do everything we can to make sure that we try and get some compensation”.

FT : Wizz Air faces pushback on plan to give chief extra time to hit £100mn bonu

Wizz Air faces pushback on plan to give chief extra time to hit £100mn bonus
Proxy advisers ISS and Pirc oppose AGM resolution to grant József Váradi two more years to win one-off award

Plans by Wizz Air to give its chief executive an extra two years to unlock a £100mn bonus have triggered a backlash as the airline battles a depressed share price and the fallout of a regulatory reprimand for its handling of client claims.

Proxy advisers Institutional Shareholder Services and Pirc have recommended investors vote against a resolution put forward by the low-cost airline to give József Váradi until 2028 to win the one-off award if Wizz Air’s share price hits £120. Shares stood at £24 on the eve of the company’s AGM, which is on Wednesday.

Pirc, in a report, described the plans as “highly excessive”. ISS has also recommended shareholders reject the re-election of Barry Eccleston as chair of the board’s remuneration committee citing “material concerns” about Wizz’s practices.

The company had given Váradi until 2026 to hit the scheme’s target when it first unveiled it two years ago, when its share price was over £40. The price has since fallen, hobbled by Wizz’s unhedged exposure to the price of oil in the wake of Russia’s invasion of Ukraine, and questions over the durability of the current boom in air travel.

Wizz Air’s board is joining others including at some US-listed companies in adjusting management incentive plans to account for the coronavirus pandemic and more recently to inflation and energy disruptions. Some of these adjustments occurred despite poor stock performances.

The move to increase Váradi’s chances of hitting the payout comes as the airline is dealing with a reputational crisis in the UK for its handling of customer compensation in the wake of last year’s travel disruption.

The UK’s aviation regulator last week reprimanded the airline for its “unacceptable” handling of customer compensation claims in the wake of cancelled or delayed flights. The airline has apologised and agreed to revamp its processes.

ISS and Pirc have not only advised shareholders to vote against the company’s proposed amendments to the award, but also against its overall remuneration report and policy.

The airline said the changes to the bonus scheme were a response to “the impact of external events on Wizz Air’s growth plans over the past two years”, including the war in Ukraine and supply chain backlogs.


The airline added it had acted in recognition of “the need to adequately retain and incentivise the CEO”.

Wizz Air’s largest shareholder is US private equity firm Indigo Partners, which focuses on air transport and owns 24 per cent of the company. Indigo’s founder William Franke has been chair of Wizz Air for almost two decades.

Just under two-thirds of the votes at Wizz’s AGM in 2021 were cast in favour of the bonus scheme, with about a third voting against, despite criticism from shareholder advisory groups.

The vote was open only to a small proportion of investors because the airline was forced to water down the voting rights of investors from outside the European Economic Area, in order to comply with EU rules around airline ownership following Brexit.

The £100mn would be paid in shares over a four-year period. The pay scheme also contains environmental, social and governance targets which have not been extended, and still need to be hit by 2026.

But the environmental targets have been “adjusted” to reflect delivery delays in newer and more efficient planes, Wizz added.

The carrier has grown rapidly over the past five years, becoming one of the most significant companies in European aviation thanks to cheap fares made possible by an ultra-low cost business model.

The airline was one of the first in the world to recover to its pre-pandemic share price in late 2020, as investors backed its aggressive expansion plan. But the airline’s shares have halved since Russia’s full-scale invasion of Ukraine in 2022.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • TGTX -41.3%, ZI -20%, ZBRA -15.4%, HLIT -14.7%, RMBS -10.9%, AAN -9.6%, RYI -9.4%, DV -8.6% (also acquiring Scibids), ROK -8.5%, NCLH -7.2%, CRK -7.1%, MPWR -6.5%, PGRE -6.5%, VTS -6.3%, JBLU -6.2%, IQV -5.3%, AMRC -4.7%, KFRC -4.6%, HUN -4.3%, WSO -4.3%, SANM -3.6%, CRC -3.5%, LEG -3.3%, SEAS -3.1% (guidance), WDC -2.5%, IDXX -2.5%, TAP -2.5%, RIG -2.4%, YUMC -2.3%, BMRN -2.2%, RVTY -2.2%, HWM -2.2%, HOLX -2%, DRQ -2% (also acquired Great North Wellhead), LSCC -1.6%, INST -1.5%, RRX -1.4%, BSM -1.3%, BCC -1.2%, GPK -1.2%, ALGM -1.2%, AMKR -1%, PCH -1%, NTB -1%

Other news:

  • TARS -5.1% (stock offering)
  • QS -3.3% (appoints new President)
  • XPEV -3.2% (July deliveries)
  • NIO -2.2% (July deliveries)
  • ESRT -2% (files mixed shelf)
  • RVMD -1% (Revolution Medicines (RVMD) to acquire EQRX in all-stock deal)

Analyst comments:

  • SOFI -4.2% (downgraded to Underperform from Mkt Perform at Keefe Bruyette)
  • PKX -3.7% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
  • SYM -3.6% (downgraded to Mkt Perform from Outperform at William Blair; downgraded to Neutral from Buy at DA Davidson)
  • RIVN -2.1% (downgraded to Neutral from Overweight at Cantor Fitzgerald)
  • DDL -1.4% (downgraded to Hold from Buy at Daiwa Securities)
  • EMN -1.1% (downgraded to Neutral from Overweight at Piper Sandler)
  • BRO -0.7% (downgraded to Mkt Perform from Outperform at Keefe Bruyette)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • ANET +13.5%, VRNS +13.3%, AESI +11.4%, WWD +6.8%, FWRG +6.8%, GPN +6.6%, OSK +6.4%, ESPR +5.7%, SSTK +5%, HRMY +4.8%, SXC +4.2%, RYTM +4%, UBER +3.7%, PEG +3.5%, ARES +3%, ESAB +2.9%, SIRI +2.9%, AUDC +2.8%, DTM +2.8%, THC +2.4%, ETN +2.4%, TREX +2.3%, LDOS +2.2%, SBAC +2.1%, LEA +2.1%, AME +2.1%, KRC +2%, GDEN +2%, BHE +2%, CVI +2%, INCY +2%, CAT +1.9%, TM +1.8%, MRK +1.8%, KMT +1.7%, IGT +1.7%, TWO +1.6%, RSG +1.4%, BLMN +1.4%, SWK +1.2%, IT +1.2%, BP +1.1%, WELL +1%, LGIH +0.9%

Other news:

  • EQRX +74.4% (Revolution Medicines (RVMD) to acquire EQRX in all-stock deal)
  • EBS +12% (awarded 10-yr $704 mln max BARDA contract)
  • INCY +2% (supply agreement with Replimune)
  • KEN +1.6% (Kenon Holdings' OPC Energy announces update in respect of bid in an Israel Land Authority Tender to design and build electricity generation facilities using photovoltaic technology) LI +1.3% (July deliveries)
  • SYNA +1.2% (adds new products to agreement with Broadcom)
  • RWAY +1.2% (CEO taking temporary leave of absence)

Analyst comments:

  • GPS +3.5% (upgraded to Overweight from Equal Weight at Barclays)
  • BBWI +2.2% (upgraded to Overweight from Equal Weight at Barclays)
  • AEO +2% (upgraded to Overweight from Equal Weight at Barclays)
  • TPR +1.7% (upgraded to Overweight from Equal Weight at Barclays)

>>> US Research Calls

Research Calls

  • Upgrades:
    • American Eagle (AEO) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $18
    • Bath & Body Works (BBWI) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $45
    • Gap (GPS) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $13
    • ResMed (RMD) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $284
    • Goldman Sachs (GS) upgraded to Neutral from Underweight at Atlantic Equities; tgt raised to $351
    • Tapestry (TPR) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $59
  • Downgrades:
    • Apellis Pharmaceuticals (APLS) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $40
    • Brown & Brown (BRO) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt raised to $76
    • Dingdong Ltd (DDL) downgraded to Hold from Buy at Daiwa Securities; tgt lowered to $2.80
    • Eastman Chemical (EMN) downgraded to Neutral from Overweight at Piper Sandler; tgt $96
    • Estee Lauder (EL) downgraded to Neutral from Buy at Citigroup; tgt lowered to $195
    • MaxLinear (MXL) downgraded to Hold from Buy at Loop Capital; tgt lowered to $25
    • Rivian Automotive (RIVN) downgraded to Neutral from Overweight at Cantor Fitzgerald; tgt raised to $29
    • POSCO (PKX) downgraded to Underweight from Equal-Weight at Morgan Stanley
    • SilverCrest Metals (SILV) downgraded to Hold from Buy at Stifel
    • SoFi Technologies (SOFI) downgraded to Underperform from Mkt Perform at Keefe Bruyette; tgt raised to $7
    • Symbotic (SYM) downgraded to Mkt Perform from Outperform at William Blair
    • Symbotic (SYM) downgraded to Neutral from Buy at DA Davidson; tgt raised to $50
    • TechnipFMC (FTI) downgraded to Hold from Buy at Kepler; tgt $19.50
    • Valley National (VLY) downgraded to Market Perform from Outperform at Hovde Group; tgt $11
    • ZoomInfo (ZI) downgraded to Hold from Buy at Deutsche Bank; tgt $20
  • Others:
    • Fresenius Medical (FMS) resumed with a Neutral at Citigroup
    • Fresenius SE (FSNUY) resumed with a Buy at Citigroup
    • Health Catalyst (HCAT) initiated with an Overweight at Cantor Fitzgerald; tgt $16
    • Installed Building Products (IBP) initiated with a Buy at Seaport Research Partners; tgt $170
    • TopBuild (BLD) initiated with a Buy at Seaport Research Partners; tgt $315
    • Vivid Seats (SEAT) initiated with an Equal-Weight at Morgan Stanley; tgt $9.50

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • ANET +14.4%, WWD +14.2%, AESI +11.4%, EBS +9.7%, ESPR +7.6%, TREX +5.2%, SBAC +4.1%, LDOS +4.1%, INCY +3.6%, ARES +3%, AUDC +2.9%, ESAB +2.9%, VRNS +2.6%, LI +2%, KRC +2%, GDEN +2%, TWO +2%, BHE +2%, TM +2%, CVI +2%, IT +1.8%, CAR +1.7%, KMT +1.7%, KEN +1.6%, SYNA +1.2%, RWAY +1.2%, BP +1.2%, VNOM +1%, WELL +1%, THRM +1%, DT +0.9%
  • Gapping down:
    • ZI -18%, HLIT -10.2%, AAN -9.6%, RYI -8.7%, KFRC -8.6%, VTS -8.3%, RMBS -8%, DV -7.5%, CRK -7.5%, MPWR -7.1%, PGRE -6.5%, TARS -6%, HUN -5.9%, SANM -3.4%, QS -3.1%, BMRN -2.8%, CRC -2.7%, AMRC -2.5%, WDC -2.4%, FANG -2.1%, ESRT -2%, LEG -1.7%, YUMC -1.7%, CEQP -1.6%, BSM -1.6%, INST -1.5%, BCC -1.2%, LSCC -1.1%, PCH -1%, NTB -1%