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Atos: Société Générale doubtful after bid for Gemalto

(CercleFinance.com) - This morning Société Générale (SG) has examined Atos after the ESN made a bid valuing Gemalto at 4.
3 billion euros.
However, analysts are not over-enthusiastic about the deal, maintaining their "hold" rating on the Atos share, along with their target price of 144 euros.

Indeed, SG acknowledges that the "timing" of the bid is right, with the share of the former king of the smart card and digital security Gemalto paying the price of a series of profit warnings. The risk of seeing a "white knight" arise is also considered weak.

Atos intends to apply the same remedies to Gemalto as for Bull, Equens and Siemens SIS. SG anticipates "significant" cost synergies of 150 million euros, or 5% of the latter's cost base over a two-year time span. However, beware of the risk of execution - especially as no synergies in revenues are expected.

Indeed, SG is concerned that this deal " would take Atos further away from its core IT business". This is despite the "numerous commercial synergies" that Worldline, Atos' subsidiary that is dedicated to payments, could draw from this. However, at the same time, Gemalto's significant terminal and hardware business is not in good shape, and it is not clearly related to Worldline. Indeed, Atos could reduce SG's fears of selling off some assets, although if it does, the price needs to be watched.

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