Vivendi/Telecom Italia: brat spat

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Rarely has the emptiness of corporate slogans been so clearly demonstrated. “Living together” is Vivendi’s contribution to the genre. But the French media group’s relationship with Telecom Italia is rapidly starting to look like a scene from a particularly unhappy soap opera.

Vivendi wants to put four new members, three of whom are on its own executive committee, on to the Telecom Italia board. That would give it a quarter of the seats. But it only has a fifth of the shares.

For Institutional Shareholders’ Service, the voting proxy advisory, the maths do not add up, and it has recommended voting against Vivendi’s proposals at this week’s annual meeting. After months of planning, Telecom Italia’s board cannot be pleased.

Fair enough. Vivendi appears to have thrown a tantrum, deciding to abstain on a vote to convert Telecom Italia’s savings (non-voting, perpetual dividend) shares into ordinary voting shares. Vivendi’s abstention will block this plan, formally announced in early November.

That will cause problems. For one, this conversion already had the approval of shareholders, including Vivendi.

Although the ordinary shareholders would face dilution, the company would save money (to the tune of €166m last year) as the ordinary shares, unlike the savings shares, do not pay a dividend.

Moreover, holders of the savings shares had agreed to pay a total of €570m for the right to have a vote, money which the indebted Telecom Italia could use.

Vivendi may object to the dilution. If the move were to go ahead, its shareholding would fall to 13 per cent. But if it really objected it should have done so weeks, not days, before the annual meeting. Vivendi’s decision to abstain smacks of petulance, not prudence. This silliness will waste the Telecom Italia board’s time, not to mention shareholders’ money. So much for getting along.

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