Management Turnover as Change Agent

Thursday, May 29, 2008

Activist Shareholders Impact A French Firm For First Time

France finds itself added to the list of European countries where activist shareholders can have an impact.  Atos Origin S.A. ATO (Paris Exchange), provider of information technology systems and services, succumbed the other day to growing pressures from activist shareholders.  After resisting increasing pressures for a number of months from Pardus Capital Management and Centaurus Capital Ltd., who happened to be the company's two largest shareholders, the company agreed to parts of their requests.  The activist funds were insisting the company make changes to its corporate strategy and management. According to a story by Geraldine Amiel for The Wall Street Journal,
In a joint statement, Atos and the funds said they reached an agreement over management and other issues "in the best interest of the company, its employees, its clients, and all stakeholders."
•  What's New: Atos Origin reached agreement with two funds on management and strategic shifts as Chairman Didier Cherpitel stepped down.
•  The Background: The funds, Centaurus Capital and Pardus Capital, will each gain a board seat at the IT-services concern:
•  What's Next: Not a breakup, Centaurus and Pardus say.

Pardus and Centaurus, which hold a combined stake of more than 23% in the French information-technology-services company, have been at loggerheads with management for months and have been seeking to oust Mr. Cherpitel and nominate their own candidates to the supervisory board.
The company agreed to select Jean-Phillippe Thiery, the chairman and CEO of the French insurer AGF, as chairman and replacement for Didier Cherpitel.  Before the agreement came about a chaotic spectacle took place where accusations were flying between the two camps.  According to a Reuters story by Dominque Vidalon,
Speaking at a news conference held jointly with his former tormentors, Atos's chief executive, Philippe Germond, said the funds had promised not to push for a break-up of the 11-year-old firm. He reiterated he would look at a merger offer if one arrived.

He said both sides regretted the chaotic scenes at last Thursday's shareholder meeting, in which the meeting hall's power was cut off to prevent the funds from pressing for a vote.

"The management and the funds fully realised that our disagreements were compromising the smooth running of Atos. That's why we chose to enter discussions and I assure you today that all the parties are extremely sorry," he said. 
Expect more pressures on French firms as activist shareholders look to make more changes. Keep a close eye on Atos Origin to determine whether the recent changes make a difference.

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