That self-imposed constraint is tactically innovative. It’s designed to quash any attempt to force Capgemini to pay even more, whether for simple control or full ownership. Doing so would be a huge loss of face in view of what it has said.
There are limited formal arrangements in France’s M&A regulations that bind companies to final offers or the financial terms of repeat bids. That contrasts with the U.K., where an offer can be formally labelled “final” and then cannot be raised even with the target’s consent. That way, investors who decide to buy, or not buy, shares based on a bidder pronouncement won’t find themselves being caught out by a sudden sweetener.
Capgemini’s statement seems categorical on not re-bidding or paying more later but this is unusual territory, and investors could be forgiven for questioning how binding the words are and under what circumstances they’d lose force. What if there’s an approach for Altran from another suitor? Could Capgemini then enter an auction if both sets of shareholders and both boards wanted it to? This seems unlikely, but people will wonder. In practice, it’s hard to see how Capgemini could wriggle out of its commitment without facing sanction or a lawsuit.
On the face of it, Altran shareholders have a simple choice between Capgemini’s offer and reverting to their company’s strategy for independence. Altran has some punchy 2022 targets. If met, there’s a plausible argument that the shares would go above the bid price. The fact that Altran’s board backed the original Capgemini offer in June suggests it sees some risk in the plan being delivered. Shareholders may also worry that the suitor is being firm on price because it knows something they don’t, thanks to its due diligence.
For Elliott, its credibility and patience face a test. It has opposed an offer at this level as undervaluing Altran. Eighteen months isn’t such a long time to wait if this deal is rejected; while Capgemini has other M&A options, Altran’s size makes it uniquely attractive. Capitulating to the offer would probably deliver only a small profit to Elliott because the fund built its position when the shares were already trading at about 14 euros. That would be vastly outweighed by the dent to credibility from caving in. Still, it wouldn’t be the first activist to settle for less than it asked for and act like it was a major victory.
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Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.
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