Elliott Opposes Capgemini Takeover Terms for Altran

(Bloomberg) -- Elliott Management Corp. opposes Capgemini SE’s 3.2 billion euro ($3.6 billion) takeover of Altran Technologies SA as proposed, believing it undervalues the French technology company, according to people familiar with the matter.

The activist hedge fund run by billionaire Paul Singer thinks the transaction between the French companies would make sense under better terms, though, because of their complementary offerings and similar culture, said the people, who asked not to be identified because the matter is private. They said the firm is supportive of a call by a minority shareholders group led by Colette Neuville to block the deal under the current terms of 14 euros a share.

Elliott is likely to increase its stake in Altran to more than 10%, which could prevent the minority holders from being squeezed out, they said. Elliott disclosed in a regulatory filing Wednesday that it had increased its position in Altran to 24.5 million shares, about 9.5% of the company, primarily through equity swaps as of Oct. 29.

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.

Altran’s Chief Executive Officer Dominique Cerutti said in an interview Monday that he expected New York-based Elliott to boost its stake above 10%. Altran spokeswoman Stephanie Bia said Wednesday, “We don’t have anything in particular to say about this.”

A representative for Elliott declined to comment. A representative for Capgemini didn’t immediately respond to a request for comment after business hours in Paris.

Lacking Support

In Elliott’s view, the transaction lacks sufficient support from shareholders under the current terms to proceed, the people said. Elliott believes that if the transaction were to proceed with slightly more than the required support, it would be advantageous for minority holders who wanted to retain their stake because they would be able to benefit from the upside of their combined services under a better Capgemini management, the people said.

Elliott has several concerns about the transaction and the process that led to it, the people said, including what had been an undisclosed agreement between Cerutti and Apax Partners, previously the company’s largest holder.

The exact terms of that arrangement aren’t clear and Apax has since sold its stake. The 2015 agreement gave Cerutti an undisclosed sum if Apax sold its stake, according to a regulatory filing. Cerutti has since refused to disclose how much he stood to gain under the arrangement.

It wasn’t until the third board vote on the transaction in September that Cerutti and three other directors with ties to Apax recused themselves. The remainder of the board voted to support the deal.

To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net;Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Katerina Petroff at kpetroff@bloomberg.net, Michael Hytha

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