Elliott Publishes Letter on Capgemini’s Offer for Altran
Funds advised by Elliott Advisors (UK) Limited (together “Elliott”), that collectively hold an economic interest in Altran Technologies SA (“Altran” or the “Company”) representing nearly 14% of the share capital, today published a letter outlining their concerns with Capgemini SE’s (“Capgemini”) offer for Altran (“the Offer”).
Elliott believes that recent developments have underscored its current intention to not tender into an Offer that fails to recognise Altran’s true value.1 Elliott’s open letter to shareholders includes the following key points:
- Capgemini’s Offer Is Inadequate. The current Offer is the result of a suboptimal process driven by a series of corporate governance shortcomings. We consider that the Offer price of €14.00 per share does not reflect Altran’s true value and implies that shareholders are expected to forgo nearly all the upside potential of this combination.
- Offer is Now Worse: The Implied Premium Is Shrinking. The equity market has gone up in value since the Offer was announced in June, yet the Offer price has remained unchanged. Based on analysts’ consensus break price, the premium offered to shareholders today is only 7% , which is significantly below the 38% offered in comparable precedent transactions.2 Furthermore, key shareholders and market participants have expressed increasingly negative sentiment towards the Offer price.3
- More Pathways to Realise Value; Fewer Reasons to Tender Now. In Elliott’s view, there is no compelling case for tendering now given (1) the potential mid-term upside in shares of an independent Altran if the Offer fails compared to the currently inadequate Offer price,4 and (2) if the Offer succeeds, the incremental potential upside that could accrue to minority shareholders alongside Capgemini resulting from the synergy potential of the combination. Furthermore, should the Offer succeed, Capgemini’s commitments to reopen or refile the Offer after the Paris Court of Appeals decision in March in principle create the potential for additional optionality for remaining Altran shareholders.
Elliott continues to urge Capgemini to properly recognise the true value of this transformative combination. Elliott is convinced that a fair price would result in a win-win scenario for both Altran and Capgemini shareholders, and prevent further uncertainty and integration delay. In the meantime, Elliott believes all Altran shareholders should be well-informed of the options available to them, particularly in light of Capgemini’s binding commitments should the Offer succeed.
Elliott’s letter, along with additional analysis and perspectives, are available to view and download at www.FairValueforAltran.com. Interested parties are encouraged to visit the website to receive additional information and sign up for future updates.
Elliott Management Corporation manages approximately $40.2 billion of assets. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds under continuous management. The Elliott funds’ investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm. Elliott Advisors (UK) Limited is an affiliate of Elliott Management Corporation.
1 Elliott's declarations of intent can be found on the AMF's website under the following references: D&I 220C0024 (3 January 2020); D&I 219C2705 (12 December 2019); D&I 219C2175 (5 November 2019); D&I 219C1736 (27 September 2019); D&I 219C1733 (26 September 2019); D&I 219C1630 (18 September 2019); D&I 219C1158 (12 July 2019). As stated in its declarations of intent, Elliott’s final intention will be determined at the end of the Offer period and promptly disclosed in accordance with the applicable regulation following its determination.
2 “Break price” constitutes analysts’ estimate of the level at which Altran shares would trade should the Offer fail. Consensus break price corresponds to the average of break prices of event-driven brokerage research and commentary from Churchill, Olivetree, United First Partners, Investec, Market Securities, and Manolo from 4 December 2019 to 6 January 2020. List of comparable precedent transactions and further analysis can be found on page 12 of Elliott’s ‘Fair Value for Altran’ presentation published on 27 November 2019, available at www.FairValueForAltran.com.
3 Examples of negative sentiment can be found on page 3 of Elliott’s Open Letter To Shareholders published today, available at www.FairValueForAltran.com.
4 Illustrative mid-term value creation potential can be found on page 16 of Elliott’s ‘Fair Value for Altran’ presentation published on 27 November 2019, available at www.FairValueForAltran.com.
Sarah Rajani CFA
Elliott Advisors (UK) Limited
+44 (0) 20 3009 1475
+44 (0) 203 745 8463
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