Fujitsu bid for GFI may falter as Apax hikes stake

Fujitsu's €419 million ($569 million) hostile bid for France's GFI Informatique SA is in trouble after private equity investor Apax Partners France raised its investment in the French IT services group. Apax boosted its stake in GFI to about 14.4 per cent on 1 August, paying €8.24 per share or a total of €20 million for an additional 5 per cent in the company.

The GFI management already holds around 15 per cent of the company, and once the two stakes are combined, it will be very difficult for Fujitsu to win the two-thirds approval it requires for its takeover offer to proceed.

Both Apax and the GFI management have said they will not tender their support to the Fujitsu offer, which they say undervalues the business. Fujitsu has insisted that it will not increase its offer. It has let the 1 August deadline for increasing the offer price go by.

Apax's big buy came after its abortive attempt to buy a 27 per cent stake in GFI for €56 million, or €6.38 per share. The deal was agreed by the GFI board in March, but had to be abandoned following Fujitsu's May offer of €8.50 per share and €3.15 per warrant.

The Paris-based private equity investor is not the only one with an eye on GFI. Anglo-French hedge fund Boussard & Gavaudan Asset Management also increased its stake in GFI by 1.3 percentage points to more than 8 per cent on Wednesday, paying €8.16 per share. Boussard has declared it intends to tender its shares in GFI Informatique to Fujitsu's buyout offer.

GFI builds computer networks and advices clients on integrating new systems into existing networks. It has reported sales of €331.9 million for the first half of 2007, up 3.8 per cent year-on-year. The company employs about 8,500 people, mainly in France, Spain, Portugal and Italy.

The French IT sector has seen a lot of deals in recent weeks. Shares in Bull SA, a computer hardware maker, jumped in July after a report that it was in advanced discussions with Hewlett-Packard that could lead to a €720 million offer. But Bull said there were no talks. It says it is considering its own offer for GFI.

Britain's BT Group has submitted a binding €60 million offer for the IT services unit of France's CS Communications and Systèmes SA, which employs 1,400 people and generated sales of €138 million in 2006. BT has been granted a period of exclusivity till November to finalise the deal.