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Elliott Calls Capgemini’s $4 Billion Altran Bid Too Low

Amy Thomson

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Activist investor Elliott Management Corp. said that Capgemini SE’s offer for Altran Technologies SA is inadequate and called the sales process flawed.

Elliott, which has built up a position of more than 10% in Altran, believes that a fair value for the company is more than 20 euros a share, based on analysts’ estimates for the company’s future earnings, it said in a statement on Wednesday. The firm had said in an earlier filing that Capgemini’s current offer of 14-euros-a-share, or 3.6 billion euros ($4 billion) excluding debt, undervalues the company.

“Altran shareholders are offered an inadequate premium to forgo the company’s promising standalone prospects, despite the huge value-creation potential of the combination,’’ Elliott said in the statement.

Altran shares rose 0.2% to 14.07 euros at 10:25 a.m. in Paris. The stock’s gained about 23% since Capgemini’s offer in June.

Capgemini’s incoming CEO Aiman Ezzat said at the Morgan Stanley European Technology, Media & Telecom Conference in Barcelona this month that the company’s bid for Altran isn’t going up. The deal was supposed to close this year, but has likely been delayed until 2020 after a shareholder lobby raised objections in a French court.

A spokesman for Capgemini said the company doesn’t have any further comment. A spokeswoman for Altran said that they’ve been in touch with Elliott and is aware of its concerns, and that the company believes that the sales process has followed regulations.

Read more about the shareholder lawsuit here.

The Altran deal will help address an engineering shortage in Europe and the U.S. that’s left tech companies short on employees, Ezzat said. When combined Capgemini and Altran -- also based in Paris -- will be able to help clients in areas such as cloud computing, the internet of things, 5G, and artificial intelligence software, Capgemini’s current CEO Paul Hermelin said in a statement in June when the deal was announced.

“There’s much more demand for engineers than there is capacity in the western world,” Ezzat said in Barcelona. “There’s no alternative unless we find a way to automate all the engineering work.”

The deal announced in June requires that 50.1% of Altran shares be tendered for the transaction to proceed. Under French law, Capgemini would need 90% of shares to squeeze out the minority holders, making Elliott raising its stake to more than 10% a pivotal consideration.

(Updates with Elliott quote in third paragraph. A previous version corrected the timing of an earlier Elliott statement.)

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Amy Thomson

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