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Hedgeweek Comment: French connection breaks down

Atos Origin, France’s second largest IT services company, dramatically halted a shareholders’ meeting in Paris last week as shareholders were set to vote on a motion by two hedge funds, Ce

Atos Origin, France’s second largest IT services company, dramatically halted a shareholders’ meeting in Paris last week as shareholders were set to vote on a motion by two hedge funds, Centaurus Capital Management and Pardus Capital Management, to shake up the company’s board and oust its chairman, Didier Cherpitel.

But no ballots were cast, as the meeting was suspended and then adjourned by Atos Origin’s chief executive, Philippe Germond, after the supervisory board chairman of the company’s employee shareholder fund FCPE said he would vote for three of the candidates proposed by the hedge funds, reversing the earlier position of his own executive board.

Centaurus and Pardus, which jointly own about 23 per cent of Atos Origin, have said that the adjournment was ‘illegal’ and have asked a judge to order the resumption of the meeting immediately. The company says it will reconvene the meeting once the FCPE board has met again to determine its stance toward the proposed changes.

The struggle by the funds to force change upon Atos Origin follows various other recent outbreaks of shareholder activism in France. Private equity firm Wendel Investissement took a stake in ceramics giant Saint-Gobain and won seats on the board this year. Los Angeles-based Colony Capital and another French private equity firm, Eurazeo, are demanding better returns from hotel group Accor and hypermarket chain Carrefour respectively.

But the adjournment of the Atos Origin meeting, where the chief executive is reported to have ‘halted the general meeting, cut the microphones, turned off the lights and slipped away’, shows how difficult it is for foreign investors who do not agree with management on strategy to gain board representation.

French ministers have long criticised hedge funds and demanded that the European Union take steps to ensure their regulation. It doesn’t seem that alternative fund managers are any more welcome in the country’s corporate boardrooms.

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