Assystem Divests Assystem Care To Improve Its Growth Profile
Assystem Sells Assystem Care to Expleo to Accelerate Growth
As disclosed during its H1 2021 results, Assystem has divested Assystem Care to improve its growth profile. Assystem sells the unit for an EV of EUR 28m. Assystem Care provides compliance, quality, and validation services to the pharma and chemical industries. The company has a headcount of 400 and expected 2021 revenues of EUR 39m. Assystem is also selling a small staffing unit servicing the industrial sector.
The buyer is Expleo, the former GPS unit of Assystem and still a 40% Assystem subsidiary. With the move, Expleo is diversifying its client base. The company heavily suffered from the 2020 crisis, which hit its two main verticals: automotive and aeronautics. Assystem Care is too small to make a significant change in Expleo’s risk profile. However, we welcome Expleo’s new growth ambitions after the challenging year 2020.
Assystem Had Big Hopes for Assystem Care
Expleo will have to succeed where Assystem failed. In December 2017, Assystem had acquired The Biotech Quality Group (BQG). Assystem amalgamated BQG in its life science activities to create Assystem Care in 2018, reaching a headcount of 400 and 2018 revenues of EUR 40m. Four years later, Assystem was unable to grow Assystem Care. The company also changed its strategy. The company has acknowledged its core expertise is around nuclear engineering. Outside of nuclear, Assystem is active in project management, digital (BIM), and niche market in rail transportation.
Further Divestments Expected
This is the first step in Assystem reducing the scope of its E&I unit. The company wants to sell infrastructure engineering activities in New Caledonia and French Polynesia (EUR 12m in revenues) and MPH, its staffing unit to the oil & gas industry (EUR 40m). Like Assystem Care, MPH shows the difficulties of Assystem to expand outside of its core nuclear engineering market. In 2011, Assystem wanted to transform MPH away from staffing to fixed projects and grow in the lucrative oil & gas industry in the UAE/Gulf Countries. Then came the oil & gas crisis and almost ten years of deflated engineering spending globally.
Assystem Still Owns 40% of Expleo
Nevertheless, we welcome Assystem’s move to become more nuclear engineering-centric. The French government will soon launch the construction of at least five EPR atomic plants. It will also refresh the majority of France’s 56 nuclear plants. These projects should drive growth for Assystem for many years.
In the short term, we are still expecting Assystem to sell its 40% stake in Expleo in the next two years. When this happens, Assystem will get, we estimate EUR 300-400m in pre-tax proceeds. This is a massive amount, considering that Assystem has a market cap of EUR 570m.