(Bloomberg) -- Thales SA, the French defense company, is discussing teaming up with private equity on a potential takeover of technology services provider Atos SE, people familiar with the matter said.

Thales, which is interested in Atos’s cybersecurity business, BDS, has been speaking with several investment firms to gauge their interest in joining a deal, the people said, asking not to be identified because the information is private. A private equity partner could pick up Atos assets that Thales isn’t interested in owning, according to the people. 

The French aerospace and security company has held preliminary talks with Atos about a potential acquisition, the people said. Shares of Atos have lost about half their value in Paris trading over the past year, giving the company a market value of about 3.9 billion euros ($4.4 billion). 

Atos stock rose as much as 9.7% in Paris trading on Wednesday after Reuters and Bloomberg News reported news of Thales’s interest. 

A deal would help Thales, which makes electronics used in combat systems, expand into fast-growing areas like cybersecurity and big data platforms for the armed forces. Atos has been under pressure after a failed deal to acquire U.S. rival DXC Technology Co. that would have created an information technology giant. 

Deliberations are ongoing, and there’s no certainty they will lead to a formal bid, the people said. Representatives for Atos and Thales declined to comment. France’s BFM Business reported in September that Thales was interested in Atos and eyeing the firm’s cybersecurity operations, citing unidentified people. 

Divestment Plans

Atos has been moving away from commoditized businesses such as outsourcing and pushing into areas like artificial intelligence. The company said in the summer that it was seeking partners for some legacy operations, including its data-center hosting and call center units. 

Atos has an existing relationship with Thales, announcing in May the launch of a joint venture called Athea focused on big data and AI for the defense and security sectors. The new platform, which will initially focus on the domestic market before expanding to the rest of Europe, builds on Atos’s work on a prototype data management project for the French army. 

Thales, which has a market value of 17.5 billion euros, has operations in about 70 countries. It’s been selling assets as the company looks to invest more in areas like artificial intelligence and quantum technology.

In August, Thales agreed to sell its ground transportation systems business to Hitachi Ltd. for 1.7 billion euros including debt. In the wake of the deal, Bloomberg Intelligence analyst Douglas Rothacker said the move opened up an opportunity for Thales to pursue growth through mergers and acquisitions.

(Updates with shares in fourth paragraph.)

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