Elliott Scores a Victory in Telecom Italia Fight
May 04 2018 - 12:32PM
Dow Jones News
By Eric Sylvers
Milan -- Elliott Management Corp., the American activist fund,
Friday grabbed control of Telecom Italia's board as the monthslong
fight over Italy's dominant phone company reached a crescendo.
In a shareholder vote over competing slates of directors,
Elliott narrowly edged out French media conglomerate Vivendi. That
gave Elliott the right to name 10 of Telecom Italia's 15 new board
members with Vivendi naming the rest.
Elliott's victory is a stinging defeat for Vivendi, which owns
almost a quarter of Telecom Italia and is the phone operator's
biggest shareholder. Elliott owns 8.8% of Telecom Italia.
Imposing its list of directors on Telecom Italia is the latest
triumph for Elliott, which has been making life difficult for
companies across Europe. The fund has inserted itself in various
other European corporate battles including at British TV giant Sky
PLC and at Akzo Nobel NV. Though not always successful, the fund
has usually managed to get some of its demands met.
The battle for Telecom Italia heated up in March when Elliott
announced it had acquired 3% of the phone company and sent a letter
to the other shareholders proposing the ouster of several directors
including the chairman. The fund has also called for the company to
sell or spin off some businesses and to begin paying a dividend on
common shares after a five-year hiatus.
Elliott's aggressive moves, still relatively rare in Italy,
shown a light on the country's record in corporate governance,
where large companies can be controlled with minority stakes. The
fight struck a nerve with many Italians who on the one hand have
little experience with activist funds and on the other have looked
askance at French companies that have crossed the Alps to make
acquisitions.
"Today's win...sends a powerful signal to Italy and beyond that
engaged investors will not accept substandard corporate
governance," Elliott said in a statement following the vote.
Vivendi has been critical of the plan Elliott outlined for
Telecom Italia, calling it short sighted and aimed at milking quick
profits out of the company to the detriment of its long-term
health.
In a sign that the battle is far from over, Vivendi said it
remained committed to Telecom Italia "and will take all measures
necessary to preserve its value and avoid its dismantling."
Elliott won by the slimmest of margins, with its slate of
directors gaining 49.8% of the votes among shareholders to
Vivendi's 47.2%. About two-thirds of shares were voted, extremely
high for an Italian shareholders' meeting.
The list of board members put forward by Elliott is a who's who
of the Italian corporate world and includes Alfredo Altavilla, a
top executive at Fiat Chrysler Automobiles NV tipped as a possible
future chief executive of the Italian-American car maker, and
Fulvio Conti, a former CEO of energy giant Enel SpA.
Vivendi's five newly elected Telecom Italia board members
include Arnaud de Puyfontaine, Vivendi's CEO, and Amos Genish,
Telecom Italia's outgoing general manager.
Write to Eric Sylvers at eric.sylvers@wsj.com
(END) Dow Jones Newswires
May 04, 2018 12:17 ET (16:17 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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