*TELECOM ITALIA : Both Vivendi and Xavier Niel will probably put their respective stake-building on hold in the post-conversion transitional phase ,and may rather consider coordinating their approach ahead of the hypothetical arrival of Orange
Facts
TI experienced a quick and radical ownership reshuffle
• Vivendi has built up its 20.12% stake in Telecom Italia (TI) -representing about 11.5% of its €27Bn market cap- in just 6 months :
- starting with a 8.24% stake delivered on 06/24/15 by Telefonica in payment of the GVT transaction
- subsequently purchasing 11.88% ,directly on the market and from a financial institution
• X. Niel disclosed :
- on 10/29/15 a long optional position on 11.21% of TI ORD shares
- on the following day an increase to 15.14%
TI is facing 2 critical EGMs
• 15 December : it will be asked to validate
- the conversion of saving shares (SAV) into ordinary (ORD) ones
- the expansion to 17 from 13 of the number of directorships requested by Vivendi, provided that current board accepts to submit this resolution to vote
• 17 December : SAV shareholders meeting will also vote on conversion
Main themes
• The success of the conversion proposal looks well-engaged as Vivendi ,which could theoretically be in position to block the deal ,seems less likely to provoke disagreement with TI management (and with the Italian establishment)
• For reciprocal reasons ,TI board has probably no interest in blocking an EGM referendum on Vivendi through a refusal ,which :
- would eliminate any commercial synergies upside
- could fuel anticipations of the future withdrawal of the French
• Regardless of the referendum outcome -if any- ,Vivendi should logically abstain from reloading shares in coming weeks ,after having stressed that it will “give the priority to the long-term development of the international media and content production and distribution group” in a 2016-17 phase of “potentially heavy investments”
• In parallel Xavier Niel ,who is intervening through his personal holding and a leveraged optional structure ,has probably a limited capacity to increase this essentially-financial investment
• Vivendi and Niel’s interests may end up fully converging due to :
- strict financial alignment
- lack of operational conflicts
- possible harmony on Brazil issue
• It has been muted that eventually Vivendi may wish to sell to Orange.