Vincent Bollore is developing an unfortunate habit of losing. The French billionaire who controls Vivendi SA emerged bruised from the latest round of his battle with former Italian prime minister Silvio Berlusconi. Bollore has been trying to block the merger of Berlusconi’s Mediaset SpA with its Spanish subsidiary.
Vivendi is the second-biggest investor in Mediaset but Bollore has so far been outmaneuvered. The Frenchman’s best chance of redemption lies in the courts. If he doesn’t want to imperil the deal, Berlusconi should do more to cozy up to his French adversary.
The Mediaset merger will create a new Amsterdam-domiciled holding company called Media for Europe which will concentrate even more votes with the Berlusconi family, at the expense of Vivendi – that’s why Bollore wants to block the deal.
The French media conglomerate owns 29% of Mediaset. However, it is currently only allowed to exercise 9.6% of the voting rights, after the Italian regulator asserted that Vivendi’s concurrent stake in Telecom Italia SpA breached rules on the concentration of media and telecoms ownership.
Mediaset shareholders voted to approve the Spanish merger, much to Vivendi’s chagrin. Bollore now has two paths to try to block the deal. Firstly, he could exercise Vivendi’s withdrawal rights, whereby Mediaset has to pay a set fee for the French firm’s stake.
That approach shouldn’t be an appealing one for Bollore. Vivendi would have to book a loss on the purchase price since it would receive 942 million euros for the stake under the terms of the withdrawal, less than the roughly 1.1 billion euros it paid for it.
It would also be less than the holding’s current 962-million-euro market value.
The second avenue is the legal one. The chances there look more promising. Vivendi is seeking the ability to exercise its full voting rights in a case that an Italian court has referred to the European Court of Justice. Should the court rule in Vivendi’s favour, then it would likely have the votes to block the deal.
The ECJ is unlikely to rule before next year, according to Reuters. Yet Mediaset has said it expects the merger to close by the end of this year. If Vivendi won the court case, it could mean that the merger would have to be unraveled, likely after the deal completes. It would all get very messy.
It’s therefore in Berlusconi’s interest to get Bollore and his lieutenants back to the negotiating table.
And regardless of the court ruling, does Berlusconi really want his second-biggest shareholder to be sniping at his strategy for the foreseeable future? There may yet be a way of keeping everybody happy.