Vivendi CEO Signals Impatience With Telecom Italia Management
December 13 2015 - 6:31PM
Dow Jones News
By Nick Kostov And Manuela Mesco
French media company Vivendi SA signaled its impatience with top
management at Telecom Italia SpA on Sunday, as its push to gain
seats on the Italian telecom's board risks foundering.
In an interview, Vivendi Chief Executive Arnaud de Puyfontaine
suggested that the French group is growing frustrated with the
management and other investors in Telecom Italia, Italy's former
state monopoly.
Vivendi--controlled by French industrialist Vincent Bolloré--has
spent more than EUR3 billion (about $3.3 billion) to acquire a 20%
stake in Telecom Italia, but isn't represented on the board.
Vivendi is Telecom Italia's largest shareholder.
"As a shareholder what we want is alignment," said Mr. de
Puyfontaine. "We want to see alignment between CEO, chairman,
shareholders and management team and the board. This has not always
been the case."
The remarks come before a shareholders meeting scheduled for
Tuesday that is likely to see a host of divisions among Vivendi,
the company's management and other large shareholders. Those
divisions could further paralyze Telecom Italia, which has
struggled with poor leadership and a lack of strategic direction
for years.
Vivendi has been battling to gain board representation because
it seeks to give Telecom Italia--which is heavily indebted and
under pressure from rivals in its domestic market--what it
considers being a better direction.
It has proposed that shareholders Tuesday consider a resolution
to increase the company's board to 17 members from 13 and to name
four directors representing Vivendi. Mr. de Puyfontaine is one
candidate being put forward, alongside Stéphane Roussel, Hervé
Philippe and Félicité Herzog.
However, a number of Telecom Italia's other shareholders have
opposed the plan, and it risks being defeated at the meeting.
As opposition mounted last week to its push to join the board,
the French company announced it would abstain from voting on
another proposal by Telecom Italia's management to convert Telecom
Italia's savings shares into ordinary stock. Shareholders are
slated to vote on that proposal as well Tuesday.
Under the plan, all shareholders would be diluted about 30% and
Telecom Italia would receive EUR500 million ($549.8 million) in
cash. Analysts have touted a conversion of the nonvoting shares as
a way for Telecom Italia to simplify its corporate structure. If
Vivendi abstains, that plan--which requires a two-thirds majority
to pass--could also fail.
Mr. de Puyfontaine said Vivendi was "not against the share
conversion in principle" but wanted to review the conditions of the
proposal. He said the cash payment of 9.5 European cents by saving
shareholders to convert their shares may be too low and asked for a
fairness opinion on behalf of ordinary stock holders.
Vivendi's share would fall to about 13% in the conversion went
through.
Telecom Italia has said the terms of the conversion were
determined with the help of outside advisors and are comparable to
other such transactions.
If both proposals fail at Tuesday's meeting, Vivendi would be
willing to speak with Telecom Italia further on ways to resolve the
impasse on the question of board representation and the share
conversion plan, said Mr. de Puyfontaine.
"If there were no agreement we'd be very happy to see what the
board would do to resolve this. We remain very open," Mr. de
Puyfontaine said. He added that the French group would be
"pragmatic" in accepting fewer seats if its stake was diluted as
part of a share conversion, although it is insisting on the four
seats currently.
Telecom Italia didn't return a request for comment Sunday.
Telecom Italia has seen a large turnover in shareholder
structure in recent years, with its weakness making it a
particularly appetizing target of late. Earlier this fall, another
French tycoon, Xavier Niel, bought options that, if exercised,
could give him as much as 15% in the company, making him the
second-largest shareholder behind Vivendi.
Write to Nick Kostov at Nick.Kostov@wsj.com and Manuela Mesco at
manuela.mesco@wsj.com
(END) Dow Jones Newswires
December 13, 2015 18:16 ET (23:16 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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