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Italy Court Gives Vivendi a Window to Challenge Mediaset Merger

Court Gives Vivendi a Window to Challenge Mediaset Merger

(Bloomberg) -- Vivendi SA got an opportunity to challenge a merger of Mediaset SpA’s Italian and Spanish businesses after a Milan court allowed it to vote on the plan.

Vivendi, Mediaset’s second-biggest shareholder, opposes the project to combine the businesses into a Dutch holding company known as Media for Europe, and Mediaset’s board had sought to exclude Vivendi from the vote at an investor meeting on Wednesday.

Mediaset’s controlling Berlusconi family sees the Dutch move as a first step toward a wider alliance of European broadcasters that would help it face up to the growing challenge from streaming giant Netflix Inc. Vivendi sees it as an attempt by the Berlusconis to cement their control over Mediaset and has vowed to vote against the move.

“The group came to this decision after having assessed the rights, or lack thereof, that minority shareholders, Vivendi in particular, would have under the proposed MFE bylaws,” Vivendi said in a statement on Saturday in response to the court ruling.

Mediaset also welcomed the ruling, however, pointing out that the court won’t allow Vivendi to vote using the part of its stake that’s held in an independent trust.

Mediaset shares were up 1.1% in early Monday trading, while Vivendi fell 0.2%.

Most of Vivendi’s 28.8% holding sits in the trust and the remaining stock that it controls directly equates to only 9.99% of the voting rights. That’s likely to leave Vivendi short of the votes it needs to overturn the resolution, even if it manages to convince other minority shareholders to join the revolt.

A Vivendi spokesman said the company will lodge a complaint with the court if Mediaset prevents the votes held by the trust being exercised.

“Mediaset is attempting to impede and spoil basic shareholder rights in order to illegally seize control,” the spokesman said.

If the resolution passes, Vivendi may have another opportunity to disrupt the merger by refusing to tender its shares to the Dutch entity and selling out of Mediaset. That would breach an upper limit on capital withdrawals that was set as a financial condition of the merger.

However, this option would be costly for Vivendi as Mediaset shares have been trading above the alternative cash buyout price of 2.77 euros ($3.04) offered to shareholders who don’t want the Dutch stock.

--With assistance from Tommaso Ebhardt and John Follain.

To contact the reporters on this story: Angelina Rascouet in Paris at arascouet1@bloomberg.net;Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, Jennifer Ryan

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