(Bloomberg) -- Atos SE and Czech billionaire Daniel Kretinsky are parting ways.

Exclusive talks with Kretinsky’s EP Equity Investments on the sale of the troubled French company’s legacy IT services business ended after the two parties failed to agree on terms and pricing. Atos also said in a statement Wednesday that it is postponing the release of its results for 2023. 

The moves deal yet another blow to a one-time star of the French technology sector, which is burdened by about €3.65 billion ($3.95 billion) in debt and has been struggling to adapt to the fast-moving shifts in the industry. The collapse of the company’s talks with Kretinsky, although not a surprise given a series of setbacks over the last few months, complicates the company’s already strained negotiations with creditors on restructuring a wall of debt maturing next year.

“Atos’ options for its €3.65 billion maturing debt load narrowed further with the failure of talks to sell its Tech-Foundations business to Daniel Kretinsky’s group,” said Tamlin Bason, a Bloomberg Intelligence litigation analyst. “Its rescheduled earnings — to March 20 from Feb. 29 — due to an ongoing audit of a goodwill impairment further muddies the outlook.”

Atos earnings have been postponed to complete an audit of a non-cash goodwill impairment charge, the company said. It posted preliminary full-year revenue of €10.69 billion ($11.56 billion), compared to a €10.89 billion estimate among analysts surveyed by Bloomberg.

For now, Atos says it plans to operate its legacy Tech Foundations business and its cloud, big data and cyber unit Eviden as separate businesses. The company is free to consider bids from other potential buyers of Tech Foundations, while due diligence is ongoing with Airbus for the big data and cybersecurity business.

No Surprise

Atos began exclusive negotiations with Kretinsky’s EPEI mid last year for the sale of the Tech Foundations unit, which sells outsourced information technology services to big companies. The initial deal outlined gave the unit an enterprise value of €2 billion, with Atos getting €100 million in cash and transferring €1.9 billion of debt to EPEI. 

Following changes to the company’s board in October, Atos demanded Kretinsky pony up more cash as talks dragged on. Atos wanted at least €500 million more than what was discussed in the original terms, Bloomberg reported in January.

“The fact that talks with Kretinsky are over is no surprise; the mystery is why Atos announced a sale and then allegedly increased the asking price and ended up with no deal and a deeply distressed situation,” said David Nazar, founder of Ironshield Capital Management. “Nobody has a satisfactory answer to that, least of all the company.”

By walking away, Kretinsky is in no way signaling a lack of interest in French assets. The energy tycoon, who has spent a decade assembling an empire stretching from power plants to retail and media, is still deeply invested in the country’s companies. He bought Editis, the nation’s second-largest book seller, sealed a deal to take control of troubled supermarket chain Casino Guichard Perrachon SA and raised his holdings in retailer Fnac Darty to 25%.

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Meanwhile, not everyone is bemoaning Atos’s failed deal. Some observers say the company is better off hanging on the business.

“The end of negotiations with Kretinsky is excellent news for us shareholders,” said Hervé Lecesne the chairman of minority holders group UDAAC. “From the outset, we have fought against this totally absurd operation. Tech Foundations is a mature business with long-term contracts. The stock of direct US competitor Kyndryl is doing well. This business must be kept, although restructured.”

The next steps for Atos are unfolding under the eye of the French finance ministry, which is monitoring the situation closely. Atos asked a court in Paris earlier this month to appoint a mediator to help negotiate refinancing with its lenders. Some of them, including Banco Santander SA and Mitsubishi UFJ Financial Group Inc., have already sold pieces of their exposure at discounts of more than 50% to avoid a potential restructuring.

The company has €2.4 billion of bank debt due next year, but it also has to deal with €500 million of convertible bonds due in November, a €750 million bond due in May next year and about €1.2 billion of notes maturing between 2028 and 2029.

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