Independent firm acknowledges that Capgemini’s offer for Altran is “fair”

/ September 25, 2019/ Altran, Capgemini, France

Finexi, an independent firm appointed by Altran to examine Capgemini’s proposal to acquire Altran for EUR 14 per share, concluded that Capgemini’s offer is “fair”.

The company used several methods to reach its decision, including Altran’s recent share price history, analyst target prices, multiple related to recent acquisitions, and discounted cash flows. Overall, depending on hypotheses, Finexi concluded Capgemini’s offer was in the right zone.

What came clear from the Finexi’s report is that financial analysts thought that Altran’s objective of an adjusted EBIT margin of 14.5% by 2022 was too optimistic. Their consensus was 13.2% by 2021.

The low consensus target is a surprise: Altran has mentioned, that before the acquisition of Aricent, it was on track to reach an adjusted margin of 13%, mostly through the improvement in its German operations, and through the relutive impact of offshoring and specialized services (“world-class centers”), and lower SG&As.

We still think that Capgemini’s EUR 14 per share for Altran is a bit low. Having said that, Altran has had a tough past two years with the Aricent revenue forgery, the cybersecurity event, and a slower improvement of its German operations than expected. Investors such as Apax, therefore, favored a quick sale at a decent price, rather than a generous offer that might come late or never.

Incidentally, the report also provided some light on the profitability of the IP partnership with IBM, which will contribute between 10 and 20 bps to Altran’s adjusted EBIT margin (between EUR 4m and EUR 8m).

Share this Post