Atos to acquire Syntel

• Syntel will bring c. $ 1 billion revenue with c. 24% operating margin to Atos

• Strengthen worldwide Atos Digital solutions portfolio and business

• Significantly accelerate Atos’ development in North America

Double digit EPS
accretion as early as 2019

Bezons, July 22, 2018

A powerful combination for Atos by acquiring a highly complementary portfolio, customer base and geographic footprint with 23,000 new joiners highly skilled in digital services.

• Atos and Syntel have entered into a definitive merger agreement under which Atos will acquire Syntel for cash consideration of c. $ 3.4 billion i.e. $ 41.0 per share, representing c. 14% premium over the last 30 trading days volume weighted average share price of Syntel
• Syntel brings a powerful suite of digital and proprietary solutions recognized by top analysts as being among the most advanced: cloud, social media, mobile, analytics, IoT, and automation at c. 40% of Syntel’s revenue
• Syntel will significantly strengthen the Group’s Business & Platform Solutions Division worldwide with best-in-class delivery platform generating among the highest margins of the industry
• This transaction expands Atos’s capabilities in North America to provide end-to-end services to US customers. It also strongly reinforces its Banking, Finance & Insurance verticals
• C. $ 120 million of annual cost synergies are expected by 2021 from G&A optimization taking advantage of the combined scale as well as the alignment of KPIs in Business & Platform Solutions
• A compelling match between the two companies supporting multiple opportunities for revenue synergies, expected to reach c. $ 250 million by 2021, through cross-selling opportunities at both the European and US customer bases
• Transaction is fully supported by Syntel management. Mr Rakesh Khanna CEO of Syntel will become a member of Atos Executive Committee
• The transaction is expected to be double digit accretive to Group EPS as early as 2019
• The transaction is planned to close by year-end. Both companies’ Boards of Directors have unanimously approved the transaction. Written voting agreements with Syntel shareholders, including founders, to vote in favor of the transaction represent 51% of the outstanding shares.

Atos (EURONEXT PARIS:ATO), a global leader in digital transformation today announced its agreement with Syntel (NASDAQ:SYNT), a leading global provider of integrated information technology and knowledge process services, with respect to the acquisition by Atos of Syntel, for aggregate consideration of c.$3.4 billion or $41.0 per Syntel share.

The transaction represents c. 14% premium over the 30 trading days volume weighted average share price. The transaction is structured as a one-step cash merger between Syntel and Atos requiring above 50% of Syntel outstanding share capital to execute the merger. On July 20, 2018, the Board of Directors of Syntel uninamously approved the transaction based on the unanimous recommendation of a special committee of the Syntel Board. Written voting agreements with Syntel shareholders, including founders, to vote in favor of the transaction represent 51% of the outstanding shares.

The Board of Directors of Atos meeting held on July 20, 2018 also expressed its full and unanimous support for the transaction.

Thierry Breton, Chairman and CEO of Atos said: ”I am very proud to announce such an important milestone in Atos’ leadership development with the acquisition of Syntel, a leading digital company, established 38 years ago, that perfectly fits our strategic priorities. It represents a transformational step for our Business & Platform Solutions Division as it will significantly enhance its growth and profitability profile through an extended digital services offering, cutting-edge India-based delivery platforms, as well as revenue and cost synergies.

In particular, the highly complementary portfolio, customer base, and geographic footprint of the combination between Atos and Syntel will significantly enhance our presence in North America and accelerate the digital transformation of Atos’s customers worldwide.

I am looking forward to welcoming the 23,000 Syntel engineers and their very strong management to continue delivering together the highest value to our clients and shareholders.”

Bharat Desai, Co-Chairman and Co-founder of Syntel, said: “This is a very exciting development for Syntel. The Syntel board is committed to maximizing shareholder value and believes that the agreement with Atos achieves that objective and delivers a win-win proposition to our customers and employees.

Our focus at Syntel is to help customers transform and succeed in the digital economy. Since its founding, our “Customer for Life” ethos has guided our investments in high-impact, domain-led services and intellectual property.

I am grateful for the trust and confidence of our customers and the passion, commitment and innovative spirit of our employees. Together they have enabled Syntel to achieve great heights. I am confident that this combination will deliver significant value to all stakeholders.”

A perfect match with Atos to enhance its digital transformation factory

With its innovative business model aligned to its client’s business challenges, Syntel generated $924 million revenue in 2017, of which 89% was in North America, with 25% operating margin. The Group employs 23,000 engineers in 30 countries, with over 18,000 staff based in India. All of Syntel’s management team is expected to join Atos.

To strengthen Atos’ digital capabilities and existing Business & Platform Solutions and accelerate its Digital strategy

This transaction is a major step in the strategy of Atos to reach a global scale and significantly expand in both Digital services and Business & Platform Solutions. The two organizations are fully complementary in their customer base, geographies, and services. Syntel will enhance Atos’s Digital Transformation Factory thanks to a powerful suite of digital and proprietary solutions recognized by leading industry analysts as being the most advanced in Cloud, Social Network, Mobile, Analytics, Cloud and IoT.

To add Business & Platform Solutions activities in North America

As part of this transaction, upon closing Atos will immediately gain a significant scale in its Business & Platform Solutions Division in North America allowing it to address its existing client base and to offer them high value-add digital services in several specific verticals such as Banking and Financial Services, Healthcare, Retail, Logistics, Manufacturing, and Insurance. Atos will also improve its margin profile in North America.

To significantly strengthen the Group’s Business & Platform Solutions Division with best-in-class delivery platform generating among the highest margins of the industry

Syntel will bring strong capabilities thanks to its best-in-class delivery platform which generates, through its state of the art delivery process, among the the highest margins in the B&PS industry. Syntel offers secure and technically advanced offshore environment with world class-campuses in India, securing access to a talent pool of over 18,000 employees.

A powerful combination with compelling value creation potential

The deal is expected to be EPS accretive immediately with double digit accretion as early as 2019 excluding the impact of PPA and implementation and transaction costs.

Significant cost synergies and cross-selling opportunities

Additionally, the Group expects to generate compelling and significant synergies both at cost and revenue levels.

Atos will benefit from tangible operational improvement by taking advantage of Syntel’s current offshore and talent supply chain to optimize its onshore/offshore headcount mix. Most of those synergies are planned by applying Syntel’s state of the art industry performance to align Atos’s existing B&PS cost model. Additional cost synergies are planned by improving operational effectiveness by reducing SG&A costs including real estate, and optimizing procurement by taking the advantage of the greater scale. The total cost benefits are estimated at $ 120 million per year on a run rate basis by the end of 2021 with a linear phasing.

Strong portfolio and complementary customer base between the two companies will generate multiple cross-selling opportunities, many of them already identified, leading to revenue synergies of c. $250 million to be achieved by the end of 2021, half of them by the end of 2020, with c. $50 million operating margin.

The combination of the two companies will allow Atos to deliver a unique portfolio for end-to-end digital transformation to customers. This will translate in already identified and actionable initiatives to generate revenue synergies in the following areas :

• Leverage Syntel’s portfolio in particular digital services, intelligent automation and IT modernization into Atos Clients into North America and Europe
• New Global capabilities to capture large End-to-End Digital Transformation projects
• Leverage Atos’ portfolio with Syntel Base in Cybersecurity, Big data, IDM and other Atos services

Management

Atos highly appreciates the outstanding achievements of Syntel’s management team. Syntel executives and management will join Atos leadership team in order to help achieve the combined Group’s strong ambitions. The Group will apply its integration methodology as successfully rolled out in past acquisitions. The Group will deeply involve key managers in its development and in particular is glad to announce that Syntel CEO Rakesh Khanna will join Atos’ Executive Committee.

Financing

The acquisition will be financed through debt fully underwritten by BNP Paribas and J.P. Morgan Securities PLC. The debt will be used to fund the purchase cash consideration together with refinancing of outstanding debt.

This transaction is in line with Atos’financial policy with an end of June 2018 proforma net leverage ratio below c.1.6x. The combined entity will maintain a solid liquidity profile and financial flexibility and targets a strong deleveraging in the next two years thanks to anticipated free cash flow generation.

Contemplated timetable

Each of the Atos and Syntel Board of Directors has unanimously approved the transaction, in the case of Syntel, based on the unanimous recommendation of a special committee of the Syntel Board. Written voting agreements with Syntel shareholders, including founders, to vote in favor of the transaction represent 51% of the outstanding shares. The transaction is subject to customary antitrust and regulatory approvals. Applicable works council procedures will be followed. The transaction is expected to close by year-end 2018.

Analysts and investors conference call

On Monday July 23, 2018, The Group will hold a conference call in English at 08:00 am (CET – Paris), chaired by Thierry Breton, Chairman and CEO, in order to comment on the project to acquire Syntel and Atos’ first half 2018 results and answer questions from the financial community.

You can join the webcast of the conference:

on atos.net, in the Investors section

by telephone with the dial-in, 5-10 minutes prior the starting time:

• France +33 1 76 77 22 57 code 1837029
• UK +44 330 336 9411 code 1837029
• US +1 929 477 0448 code 1837029

After the conference, a replay of the webcast will be available on atos.net, in the Investors section.

Contact

Media: Terence Zakka – +33 6 12 88 12 61 – terence.zakka@atos.net
Investor Relations: Gilles Arditti – +33 6 11 69 81 74 – gilles.arditti@atos.net

About Atos

Atos is a global leader in digital transformation with approximately 100,000 employees in 73 countries and annual revenue of around € 12 billion. European number one in Big Data, Cybersecurity, High Performance Computing and Digital Workplace, the Group provides Cloud services, Infrastructure & Data Management, Business & Platform solutions, as well as transactional services through Worldline, the European leader in the payment industry.

With its cutting-edge technologies, digital expertise and industry knowledge, Atos supports the digital transformation of its clients across various business sectors: Defense, Financial Services, Health, Manufacturing, Media, Energy & Utilities, Public sector, Retail, Telecommunications and Transportation. The Group is the Worldwide Information Technology Partner for the Olympic & Paralympic Games and operates under the brands Atos, Atos Consulting, Atos Worldgrid, Bull, Canopy, Unify and Worldline. Atos SE (Societas Europaea) is listed on the CAC40 Paris stock index. www.Atos.net – Follow us on @Atos
Disclaimer

This document contains further forward-looking statements that involve risks and uncertainties, including references concerning the Group’s expected growth and profitability in the future which may significantly impact expected performance than indicated. Significant risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as market conditions or competitors behaviors. In this document, all information relating to Syntel has been elaborated with regards to public information. Any statements made in this document that are not statements of historical fact, including statements about Syntel’ beliefs and expectations and statements about Atos’ proposed acquisition of Syntel, are forward-looking statements and should be evaluated as such. Forward-looking statements include statements that may relate to Atos’ plans, objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historical information. Actual events or results may differ from those described in this document due to a number of risks and uncertainties that are described within the 2017 Registration Document filed with the Autorité des Marchés Financiers (AMF) on February 26, 2018 under the registration number: D.18-0074. Atos does not undertake, and specifically disclaims, any obligation or responsibility to update or amend any of the information above except as otherwise required by law. This document does not contain or constitute an offer of Atos’ shares for sale or an invitation or inducement to invest in Atos’ shares in France, the United States of America or any other jurisdiction.