By Alex Webb
Vincent Bollore has blinked.
Vivendi SA, the French media conglomerate he controls, on Friday backed down in its battle with Elliott Management Corp. to control Telecom Italia SpA. It withdrew a motion which aimed to wrest control of the board from the activist investor.
After a year characterised by intransigence on both sides, it was a significant step toward ending a conflict that has seen shares in the former Italian national carrier lose more than a third of their value.
To some extent, the climbdown was symbolic. Vivendi, which has five of the 15 board seats, had called a shareholder vote to replace half of the remainder, all of whom are aligned with Elliott. But after all three major independent shareholder advisory groups recommended blocking the proposal, it was clear that the effort was going to fail.
That made the retreat a smart move on the French billionaire’s part: he picked the lesser defeat. Had he lost the vote, it would have served to renew the mandate of the Elliott-nominated director slate, who ousted counterparts backed by Vivendi in a shareholder vote last year. That would have weakened the Bollore’s negotiating position as he seeks a compromise - he wants more influence over a company in which he has invested €4bil, while Elliott wants an end to destabilizing attempts to rejig the board.
Winning Friday’s vote would have strengthened Elliott’s hand, making it even harder for Vivendi to wring out concessions. One possibility would have seen each side take seven seats each. The fifteenth directorship might then have been a swing vote going to a nominee from Cassa Depositi e Prestiti, the state-backed lender which owns about 10% of Telecom Italia, and whose goals are similar to those of Elliott: namely, merging the carrier’s network with smaller rival Open Fiber SpA.
The climbdown does, however, indicate that Bollore is willing to seek a middle ground which is workable for all parties. Bollore might be strong-willed, but he’s not irrational.
He’s backed down on issues before, abandoning a creeping takeover attempt for Ubisoft Entertainment SA in 2017 after shares in the video gamemaker recovered.
I’ve long advocated a compromise over Telecom Italia, and it’s overdue. The uncertainty created by the shareholder tussle has destroyed value at the carrier, which has often looked like an ill-treated child torn between two squabbling parents. — Bloomberg
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