Airbus is in talks with Atos to buy its cybersecurity division BDS, a person familiar with the matter said, rekindling interest in one of France's prized security assets after opposition from the aerospace group's own investors earlier this year.
Atos (ATOS.PA) shares rose 21% after Le Figaro reported Airbus (AIR.PA) was in "advanced talks" with it over BDS, which secures communications for French military and spy agencies and builds servers for supercomputers.
The person familiar with the matter confirmed ongoing talks to buy BDS, which is part of an entity in which Airbus sought to buy a minority stake earlier this year, adding that contacts on the issue had never been entirely broken off.
Atos and Airbus declined to comment on "market rumours".
Airbus said in March it had decided not to make an offer for a 29.9% stake in Atos' division Evidian, later renamed Eviden, sending shares in Atos tumbling.
Airbus CEO Guillaume Faury said at the time it was still open to a strategic partnership, having previously noted that aerospace is increasingly driven by big data, connectivity and high-power computing.
Airbus dropped the idea after hedge fund manager Christopher Hohn and some other investors opposed it on the grounds that Evidian was a "highly levered company" that would dilute the quality of the Airbus business.
Le Figaro said Airbus was now in direct discussions with the Atos board on a narrower purchase of the BDS business.
For Atos, such a sale would mark yet another twist in a more-than-year-long saga marked by governance instability and a series of setbacks that pummelled its shares.
The renewed talks emerged two months after banker Jean-Pierre Mustier took the helm of Atos' board of directors, following the tumultuous tenure of predecessor Bertrand Meunier.
SCRUTINY
Mustier, a former CEO of Italian bank UniCredit, was tasked with securing a contested deal with Daniel Kretinsky, under which the Czech billionaire would take over Atos' loss-making legacy operations.
The plan includes a 900 million-euro capital increase for Eviden, which includes BDS.
Jefferies analysts said a deal for BDS would be worth some 1.5-2.5 billion euros, but could still face obstacles.
"We see the rationale of the deal as much sounder than acquiring a minority stake, given control of the assets of interest to Airbus," Jefferies said in a note.
"However, we believe the group would still have to defend that this is not a politically driven deal, aimed at funding Atos' transformation plan."
The future of Atos has been under close French government scrutiny since its shares collapsed last year.
Airbus is itself in the midst of reorganising to give Faury more time to focus on problem-strewn defence and space activities, with the more vibrant commercial planemaking arm to be placed under its own dedicated CEO, Christian Scherer.
Until now, Faury has doubled up as leader of Europe's largest aerospace company as well as its core civil activity.
The earlier stumble over Atos accelerated pressure on Faury from the Airbus board to sharpen the focus on its strategy outside the planemaking operation, and sped up the internal reorganisation, people familiar with the matter said.
Airbus is concerned that its position in an increasingly software-focused defence industry would be at risk if the Atos activities were absorbed by a rival such as French defence electronics maker Thales (TCFP.PA), one of the people said.
Thales has been busy acquiring assets this year but has denied being interested in buying a stake in Eviden.
