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Fight Erupts Between Bollore's Vivendi and Mediaset Over Merger

Fight Erupts Between Bollore's Vivendi and Mediaset Over Merger

(Bloomberg) -- Vivendi SA is challenging Italy’s Mediaset SpA ahead of a crucial shareholders’ meeting that could make or break a European industrial project spearheaded by the Berlusconi-controlled media company.

The French conglomerate controlled by billionaire Vincent Bollore said it intends to vote against the Italian TV company’s proposal to merge with its Spanish affiliate, confirming a Bloomberg News report from last week. Under Mediaset’s plan, the combined entity would be housed in a Dutch-registered holding company called Media for Europe NV.

Fight Erupts Between Bollore's Vivendi and Mediaset Over Merger

Vivendi plans to oppose the merger after assessing “the rights, or lack of them, that minority shareholders and particularly Vivendi would have under the proposed” bylaws of the expanded entity, the Paris-based company said in a statement on Monday.

Vivendi is Mediaset’s second-biggest investor with a stake of around 29%, but most of its shares sit in an independent trust. That leaves the company able to vote using only the remaining stock that it controls directly, which equates to 9.99% of the voting rights. The French company filed a request with a Milan court to preserve its right to participate in the Sept. 4 shareholder meeting.

Shares of both companies were little changed in European trading on Monday.

At next week’s gathering, investors will decide on the plan to create Media for Europe. Mediaset’s controlling shareholder, former Prime Minister Silvio Berlusconi’s family, wants other national broadcasters to invest in the new entity, which would collaborate on data platforms and advertising in response to the growing threat from Netflix Inc.

But the plan is overshadowed by a long-simmering conflict between the Berlusconis and Vivendi, which sees the Dutch holding as a move by the family to cement its control over Mediaset, people familiar with the matter have said.

Today’s announcement follows a boardroom battle that saw Vivendi face off against U.S. hedge fund Elliott Management Corp. over the past year for control of Telecom Italia SpA. That conflict has recently abated, but shares in the Italian carrier have lost a quarter of their value over the period.

It’s unclear whether Vivendi can block Mediaset’s merger plans, which require a two-thirds majority to pass. If it loses the vote, Vivendi will need to decide whether to tender its shares to the Dutch entity or sell out of Mediaset.

Even if the resolution does pass and Vivendi decides to remain a shareholder, its opposition to a cornerstone of Mediaset’s future strategy may prolong the damaging feud.

To contact the reporters on this story: Angelina Rascouet in Paris at arascouet1@bloomberg.net;Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Frank Connelly

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