Owning less than 1 per cent of a company does not normally entitle an investor to take control of its destiny but things work differently in Italy. When Vincent Bolloré acquires a tiny minority interest, everything is up for grabs.
Vivendi, in which the French industrialist and investor holds a 14.5 per cent stake, last week took 3.5 per cent of Mediaset, the company founded by Silvio Berlusconi, Italy’s former prime minister. The deal gives Mr Bolloré an indirect interest in Mediaset of 0.5 per cent, together with control of its premium sports and films channel, yet his ascent to power is already being treated in Italy as a fait accompli.
The global media industry is replete with treacherous alliances, bulging pay packages and moguls who dominate companies by holding minority stakes with special voting rights. But Mr Bolloré’s style of corporate governance makes Rupert Murdoch, chairman of 21st Century Fox, look like a saint.
Join the club if you cannot understand Mr Bolloré’s plans for Mediaset and Telecom Italia, of which Vivendi holds just under 25 per cent. He does not feel the need to explain himself, and may not even have worked out his endgame yet. Those who question or resist him tend not to survive for long.
There is much to admire about Mr Bolloré. He is a Breton outsider, not a product of the Paris establishment. He invests for the long term — decades rather than the months or years of others. He is imaginative, investing in Africa when others shunned it (although his company’s offices were raided last week as part of a corruption inquiry) and cleverly shifting out of papermaking into plastics and now batteries and electric cars.
But Mr Bolloré learnt long ago how to be a capitalist with the minimum of capital, and he has honed that skill. He regards France and Italy as fertile places to mount a challenge to Netflix and HBO. It is equally valuable to him that they permit his Game of Thrones approach to business.
The French government did Mr Bolloré a big favour with its 2014 Florange law, which encouraged companies to allow investors holding shares for more than two years double voting rights. He exploited this well-meaning blunder to take control of Vivendi despite holding only a minority stake and to become its chairman. He has also assumed managerial oversight of Canal Plus, Vivendi’s television and film group.
Mr Bolloré’s personal prominence at the helm of Vivendi is unusual. In the past he has mounted raids on French companies as an activist investor to extract better terms or to shake up management. But his use of minority stakes to give himself a large degree of influence is tried and tested.
Antoine Bernheim, the sphinx-like former partner of Lazard Frères and Mediobanca, the French and Italian merchant banks that once wielded influence over swaths of industry in those countries, taught him a lot. Mr Bolloré holds a stake in Mediobanca and his daughter, Marie, sits on its board, a useful position in the byzantine world of Italian high finance and politics.
Bernheim, who died in 2012, trained Mr Bolloré to build an empire from small beginnings. As Thomas Singlehurst, a Citigroup media analyst, observes, he is “economical” — if he gains control at 15 per cent, that is what he invests. Muddy Waters, the short seller, calls him an “outstanding capital allocator” despite the “horrifically complex” structure of the Bolloré group.
All very clever but is Mr Bolloré a builder of businesses or simply of assets that he can one day dispose of at a higher price? Those close to him suggest he is both — he thinks Vivendi, once run by Jean-Marie Messier, whose attempt to build it into a global media company failed, still has potential.
If it transpires, though, that French, Spanish and Italian programmes and films only travel so far, he will be in control when a bidder — Liberty Global, BSkyB, 21st Century Fox or whoever — knocks on the door. Meanwhile, perhaps he will swap some of Telecom Italia for more of Mediaset. Who knows?
It is a fair bet that Mr Bolloré will somehow emerge richer, given that he has achieved his usual trick of securing control without paying a control premium. The tactic failed in the UK in the mid-2000s when he tried to finagle a 29 per cent stake in advertising group Aegis into board control and was rightly rebuffed. Even so, he came out ahead when Japanese group Dentsu acquired Aegis in 2013.
But it begs the question of whether others should go along on his opaque quest. Mr Murdoch took little account of minority investors in News Corp before he spun out its entertainment arm into 21st Century Fox in 2013 but his interests were at least simple. Mr Bolloré operates through various vehicles including 60 per cent of Havas, the advertising group.
A deal that suits Mr Bolloré in the round could be very good for shareholders in Vivendi but not so good for those in Telecom Italia and Havas, or any other combination of the above. Even if you trust him, you would need to mirror his investment structure to match all of the returns he makes.
It also begs the question of why he is allowed to get away with it. France and Italy’s perverse and lax governance rules enable Mr Bolloré to flourish. Southern Europe is gaining the media mogul it deserves.