Capgemini’s Acquisition of Altran Delayed by Elliott by Up to Five Months

/ November 28, 2019/ Altran, Capgemini, France, M&A (large, with revenues above $50m), News

Capgemini’s acquisition of Altran will be delayed by up to six months. Edge Fund Elliott has, through intermediaries, brought the case to court. The initial ruling on December 4 will decide if the acquisition will be suspended. A final verdict will occur by the end of March at the latest. Capgemini is confident that it will get 50.1% of Altran’s shares. The company says it is continuously assessing the market, through its roadshows and contacts with investors.

However, Capgemini fears the justice process guerilla that Elliott is pursuing, will delay the conclusion of the deal by up to five months, and will result in rising attrition among top executives. In its Q3 2019 financial call, Altran had not pointed to rising attrition and had increased its headcount by 1,000 during the quarter. Altran had not flagged executive runaway either. However, Mr. Hermelin, the CEO of Capgemini, is right in his assessment: the delay is not good, neither for Altran nor for Capgemini.

Capgemini ruled out increasing the share of its offer, mentioning access to the books of Altran had comforted it in its price. The company indicated that it had digital M&A options other than Altran, should it fail to secure 50.1% of Altran’s shares.

Meanwhile, Paul Hermelin thinks that the Altran acquisition will help it move to the IT services #7 position from currently #8. Paul Hermelin, who is leaving the CEO position by mid-2020, said that under the leadership of forthcoming CEO Aiman Ezzat, Capgemini would aim to reach the IT services’ top five spot within three years. We are guessing IBM Global Services, Accenture and TCS will be in the top three. This leaves two positions to fill.

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