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Mediaset Falls After Adviser ISS Opposes Dutch Merger Plan

Mediaset Falls After Adviser ISS Opposes Dutch Merger Plan

(Bloomberg) --

Proxy adviser ISS said shareholders in Mediaset SpA should vote against the Italian company’s plan to merge with its Spanish affiliate by creating a Dutch-registered holding company, sending its shares down as much as 1.9%.

Mediaset wants to join forces with TV companies from across the region to pool data and gain scale with advertisers so they can stand up to U.S. on-demand video platforms such as Netflix Inc. Shareholders will vote on the first step in that project, a combination of its Italian and Spanish businesses.

In a report obtained by Bloomberg, ISS said the transaction isn’t “particularly attractive from a financial standpoint” and minority shareholders would be worse off in terms of corporate governance.

“The proposed governance structure has the clear goal of cementing the control of the Berlusconi family apparently to pursue an M&A growth strategy without losing control of the combined company,” ISS said. “For these reasons, support for the proposed transaction is not warranted.”

Mediaset shares reversed a 2% gain on the Bloomberg report and were down 0.4% as of 11:07 a.m in Milan.

Another proxy advisory firm, Glass Lewis, said Mediaset shareholders should vote for the Dutch plan because the combined business would be more efficient.

Mediaset says the new Dutch base will make it easier to convince other European broadcasters to come on board with its plan. However, it could also cement the control of Mediaset’s dominant shareholder Silvio Berlusconi by doubling his family’s voting rights.

Mediaset’s second-biggest shareholder, French media group Vivendi SA, is in a simmering conflict with the Berlusconis and could potentially block the Dutch project if it decides to withhold its participation.

To contact the reporters on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net;Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

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

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