How Can Berlusconi’s Mediaset Stay Italian? By Becoming Dutch
(Bloomberg Opinion) -- Italy’s two most prominent families have had their fair share of disagreements. Yet they can both accept one thing: they’d rather domicile their companies in the Netherlands than at home. Strangely, doing so can also ensure the firms remain Italian-controlled.
The Agnellis and the Berlusconis are very different beasts. Silvio Berlusconi is the arriviste media mogul and former Italian prime minister who is as infamous for his “bunga bunga” parties as his business empire. The Agnellis are often dubbed Italy’s royal family, and have stewarded Fiat and its offshoots since paterfamilias Giovanni Agnelli founded the carmaker 120 years ago.
Mediaset SpA, the media conglomerate that Berlusconi controls, announced on Friday it would merge with its majority owned Spanish subsidiary and domicile the new company in the Netherlands. After combining Fiat with Chrysler in 2014, the Agnellis arranged a Dutch domicile for the new entity, Fiat Chrysler Automobiles NV.
The irony is that, while the arrangements might seem a blow to Italian pride, they actually help keep the two firms under Italian control. Dutch law allows special voting structures that give more power to long-term shareholders, but that’s trickier to achieve under Italian law.
After the move to the Netherlands, investors who have held Mediaset stock for two years will be entitled to five times the voting rights of ordinary shareholders, increasing to 10 times after three years of ownership. That’s similar to FCA, where the Agnellis’ investment vehicle Exor NV holds 29% of the stock but 42% of the voting rights.
The context for Mediaset, which owns a series of TV and radio stations, is significant. Back in 2016 it accused Vivendi SA of seeking to stage a takeover bid after the French media company said it planned to increase the size of its stake in Mediaset to as much as 20%. It sparked a distracting two-year legal battle which ultimately saw Berlusconi’s Fininvest SpA retain control.
A Dutch domicile ought to reduce the likelihood of such a hostile approach being repeated.
FCA recently backed out of a planned merger with Renault SA which would also have seen the new entity based in the Netherlands. Control was clearly a factor here as well: the French state, which owns 15% of the French carmaker, seemed wary about letting the Agnellis be the biggest investor post-merger. The family’s power would have been exacerbated by the voting structure.
While I’m no fan of dual voting classes, as I wrote on Friday, in this case at least all shareholders are rewarded equally if they retain the stock for an extended period. The Dutch structure will give Mediaset shareholders some certainty over the future direction of the company. That will give it more space to make its own acquisitions, as it sets about building the scale to compete with the incursions of streaming platforms and digital advertisers.
To contact the editor responsible for this story: Jennifer Ryan at jryan13@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.
©2019 Bloomberg L.P.