Monday 26 May 2008

Atos Origin turning from farce to tragedy

Further to my piece on 30th April 08 – Atos Origin deserves to get its future sorted – unfortunately the situation is fast turning from farce to tragedy. The FT (23rd May 08) description of Thursday’s AGM – Atos board narrowly escapes rout by activist investors at AGM – recounts a chaotic meeting which hardly dignifies one of the more important European IT services – and indeed a group just outside the Top Ten UK IT services providers with c£700m of UK revenues.

Basically activist shareholders – Centaurus and Pardus who now hold c23% of the stock– want to gain control of the board and put the company up for sale; thus gaining a quick and possibly fairly significant return on their investment. They could have got their way as, at the last minute, Gerard Guerguerian representing the Employee Shareholder Trust (which holds 3% of the shares) said they would vote with the activists. However, Philippe Germond declared that Gerard Guerguerian did not have the authority of the Employee Trust to cast his vote that way. So he adjourned the AGM.

Guerguerian reports into Germond and sits on Atos’ Exec Committee – so you can see why Germond, his boss, was just a little peeved by this act of disloyalty. On Friday, the Employee Trust removed Guerguerian (I am unsure about the security of his day job) . So I guess the reconvened AGM will now endorse the management. Also on Friday, ex-Atos CEO, Bernard Bourigeaud, announced that he no longer wanted a seat on the Atos board, as a representative of the activists, because of ‘hostility towards him from management and board members’.

This is all deeply unsatisfactory. When Atos was up for sale last year, it reckoned it lost upwards of €100m of business. Goodness knows what it is losing now. Would you award a big contract to a company where its future was so unclear and its shareholders were acting in this juvenile manner?

As I said before, Atos deserves better than this. Whatever way the vote goes, it all means that Atos’ days as an independent are numbered. Paul Hermelin, CEO of Capgemini has already been approached by the activisits to buy parts or all of the Atos. But the price that shareholders will get will be seriously eroded everyday that this open warfare continues.

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