Fund manager urges Airbus to drop 'zero value' assets

According to activist investor Chris Hohn, Airbus SE should hold off on purchasing a stake in a unit of the French software giant Atos SE since doing so would be a "very inefficient" use of money and divert management from its current goal of fulfilling delivery deadlines.

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According to a letter written to Guillaume Faury, chief executive officer of Airbus, and posted on the website of Hohn's TCI Fund, owning a stake in the Evidian company would expose Airbus to what Hohn called a "low-quality, highly leveraged company," along with the company's operating losses that could prove to be material. 

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According to Hohn's article, "The acquisition appears to be a bailout of Atos, a corporation that is weighed down by unmanageable amounts of debt and other liabilities."

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As the planemaker looks to increase its cybersecurity capabilities, Faury stated at the annual earnings conference last week that Airbus and Evidian are complementary and have synergies. Atos said in a statement Thursday that its board has chosen to "continue engage with Airbus" despite the lack of an agreement to "perform due diligence and agree on conditions."

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Having frequently failed its delivery targets last year and only handing over a small number of new aircraft in the first month of this year, Hohn criticized Airbus for considering the move at a time when the firm has to get its operations back on track.

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Since the entire globe depends on Airbus, management must give the ramp-up its top priority, according to Hohn. He suggested that the Toulouse, France-based business increase its dividend to shareholders and repurchase its "very undervalued" stock as a better use of its capital.

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While declining to respond to Hohn's letter, Airbus, which is exploring a 29.9% stake in Evidian, stated that a cooperation between the two businesses would "create a win-win situation" and allow Airbus to "generate more value for its clients and shareholders."

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According to the financial consultants for the firm, Atos is looking for a price of at least €7 billion ($7.5 billion) for the stock it is selling, the Les Echos newspaper said last week.

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Hohn, who is best known for investing in businesses and pushing for reform to raise share prices, said that TCI has been a long-term shareholder of Airbus with a position of more than 3% of the company's shares.